Crain's Detroit Business July 19, 2021, issue by Crain's Detroit Business

THE CONVERSATION: Omari Rush on rebounding from the pandemic. PAGE 30

Q&A JOSH LUBER StockX co-founder looks back on time in Detroit. PAGE 4

CRAINSDETROIT.COM I JULY 19, 2021

Butterworth Hospital in Grand Rapids. | SPECTRUM HEALTH

Workers install a sign on the Southfield headquarters of Beaumont Health. | BEAUMONT HEALTH

COLLISION COURSE

outhfield’s Beaumont Health and Grand Rapids’ Spectrum Health are barreling toward a merger, one that will create not only the state’s largest health system but its largest employer. The two health systems have been on a similar trajectory for the past two decades — both created by mergers themselves — but with dissimilar results. Beaumont has struggled to keep its employees happy as it launched several cost-cutting campaigns to improve margins and reinvestments. Meanwhile, Spectrum has proven to be an adept operator, gobbling up smaller systems along the way, and growing to become a dominant player on Michigan’s West side. In this issue, Crain’s partnered with Grand Rapids’ business publication MiBiz to revisit the pair’s history — how past moves and market forces led the systems to join forces in a bid to dominate Michigan’s health care landscape. PAGE 26 REAL ESTATE

Ross interest offers hope for District Detroit jumpstart BY ANNALISE FRANK, CHAD LIVENGOOD AND KIRK PINHO

But a number of obstacles would have to be overcome to succeed where other partnerships haven’t. CRAIN’S BUSINESS Ross, 2020 a native of Detroit, owner of Billionaire StephenCHICAGO Ross’ interest in developing real estate in The Dis- the Miami Dolphins and major Unitrict Detroit could signal forward versity of Michigan donor, no longer movement on a parking lot-laden plans to build a UM Detroit Center for section of the city where many prom- Innovation on the failed Wayne County jail site with fellow billionaire Dan ises have gone undelivered.

Gilbert, as they announced they would in October 2019. But the idea isn't dead: Ross is in talks with the Ilitch organization about building a UM satellite campus just west of the Fox Theatre, sources told Crain’s. The Ross-UM project was expected to take about half the 14-acre site, surrounded by development done by

Gilbert’s Bedrock real estate arm. Where Ross and Gilbert split at the jail site were fundamental development issues like building orientation, sight lines, site entrances, interconnectivity and accessibility and other issues — and how all of those impacted the remaining Gilbert land, according to a source familiar with

the discussions. That swath of land that Ross is talking about with the Ilitch group is largely surface parking lots. But developing it could still pose more of a challenge than the single-owner jail site because Ilitch ownership is See ROSS on Page 25

NEWSPAPER

CRAIN’S DETROIT BUSINESS 2021

Our annual ranking of the fastest-growing companies in metro Detroit. PAGE 10

NEED TO KNOW

MEDIA

THE WEEK IN REVIEW, WITH AN EYE ON WHAT’S NEXT  PARTS OF I-75 COULD BE CLOSED FOR WEEKS AFTER FIRE THE NEWS: Parts of I-75 in Troy could remain closed for weeks for repairs after a fuel tanker explosion Monday caused extensive damage to the busy freeway, the Michigan Department of Transportation said Wednesday.

 BIDEN APPROVES FLOOD DISASTER DECLARATION THE NEWS: President Joe Biden has approved a disaster declaration for Michigan due to last month’s heavy rainfall that led to basement and street flooding in the Detroit area, the White House said. Word that Biden ordered federal assistance to supplement state and local recovery efforts came a day after a regional water authority board said it was forming a committee to look at its response to the crisis. The committee will lead the Great Lakes Water Authority board’s independent investigation and hire engineering and legal firms to assist in the review, Michelle Zdrodowski, spokeswoman for the authority, said in an email. WHY IT MATTERS: The federal declaration also makes federal grants and low-cost loans available to residents and business owners in Detroit, other parts of Wayne County and Washtenaw County who were affected by the storm.

WHY IT MATTERS: MDOT said damage is severe enough to rebuild all lanes of the expressway in both directions where the tanker burned. Initial work will focus on replacing sections of the barrier wall and the left/ center lanes in each direction, MDOT spokesman Robert Morosi told Crain’s in an email.

 SMALL-BUSINESS OPTIMISM RISES THE NEWS: Sentiment among U.S. small-business owners rose to an eight-month high in June as a larger share expected the economy to improve while more said they plan to expand and hire. The National Federation of Independent Business optimism index increased 2.9 points to 102.5. The figure exceeded the median projection of 99.5 in a Bloomberg survey of economists. A record 39 percent of owners, up from 34 percent the prior month, reported they raised compensation as businesses struggled to fill open positions. Some 46 percent said they were un-

able to fill vacancies — more than twice the historical average of 22 percent, the NFIB said. WHY IT MATTERS: Small businesses continue their rebound from the crisis days of the early pandemic. But they’re growing increasingly frustrated with labor shortages and supply issues.

 S. KOREAN MANUFACTURER PLANS $300M INVESTMENT THE NEWS: SK Siltron CSS, a South Korean manufacturer of silicon carbide wafers, is planning to invest $300 million and create 150 jobs in Bay County as it ramps up electric vehicle supply capabilities. More than 100 of the “high-paying, skilled jobs” would be skilled worker positions, while the rest would be professional engineers, the company said. WHY IT MATTERS: The expansion, expected to take place over the next three years, would more than double the company’s Michigan operations. It has around 130 workers at a plant in Auburn, halfway between Bay City and Midland.

 FORD FIELD TO HOST FANS AT FULL CAPACITY THE NEWS: The Detroit Lions say Ford Field can be at full capacity this season, a year after the public

Detroit native Byron Allen buys Michigan TV station  Media mogul and Detroit native Byron Allen is buying a Michigan television station. Atlanta-based Allen Media Broadcasting LLC is paying $70 million in cash for WJRT-TV in the Flint-Saginaw media market, the company said Wednesday, from Atlanta-based Gray Television. The deal for WJRT is expected to close in the third or fourth quarter, pending regulatory approvals. Allen's company, after all pending deals are completed, would own 24 broadcast affiliates around the country as well as The Weather Channel and other cable outlets. Allen, whose company is one of the largest Black-owned media companies in the nation, has campaigned to get major advertisers including General Motors Co. to commit to spending more advertising with Black-

did not have access to games during the pandemic. The team will follow the state’s reopening guidelines and will not require fans to wear masks. The Lions will not ask spectators for proof of vaccination status, but they will encourage unvac-

Allen

owned media. He challenged GM CEO Mary Barra to meet with him in a panel session at last year's Detroit Homecoming.

cinated fans to wear a face covering. WHY IT MATTERS: The return of fans will mark another return to something resembling normal. Whether the Lions’ performance on the field is normal remains to be seen.

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2 | CRAIN’S DETROIT BUSINESS | JULY 19, 2021

FINANCE

Q&A

‘THAT UNIQUE MOUSETRAP’ ‘Chilling effect’?

StockX co-founder Luber looks back on time in Detroit

Finance pros differ on possible outcomes of Biden calls to rein in M&A

BY ADAM FINKEL | SPECIAL TO CRAIN'S DETROIT BUSINESS

Can you think of someone who moved to a new state for a few years and created an industry-leading business valued in the billions? One is Josh Luber, co-founder and former CEO of Detroit-based StockX. After formally leaving the company known as a “stock market of things,” in September after stepping down as CEO in 2019, he is now preparing to leave his home in Detroit — a home filled with more collectible shoes than just about any other home in the area. Some people collect wine and cars. Luber collects shoes and cards. It makes sense: as one of the co-founders of StockX, he knows firsthand the growing economy around sneakers and trading cards. Over his last six years in Detroit, the company he helped launch has grown to over 1,000 global team members with the largest concentration in Detroit; corporate offices spanning London and Tokyo, and 11 authentication centers including Toronto, Hong Kong and Melbourne, Australia. While the corporate offices are not expected to have an official reopening until next January, the company he helped launch is in growth mode. Its valuation was last reported at $3.8 billion, and it ranked in the fourth spot on The a16z Marketplace 100. An IPO is widely expected in the next year, which could make dozens of employees in the Detroit area into millionaires. That’s enough money to buy a closet full of Jordan 1 OG Chicago Shoes from 1985, which last sold for nearly $20,000 at StockX. As Luber, who is no longer involved in the day-to-day operations of the business, departs De-

BY NICK MANES

Josh Luber, co-founder and former CEO of Detroit-based StockX | COURTESY PHOTO

troit, he reflected on his time in Detroit working with Rocket Companies founder Dan Gilbert and what he’s working on now in an interview, which has been edited for brevity.  Knowing of Dan Gilbert’s emphasis on the “Isms,” how did you seek to build a corporate culture in Detroit? Yeah, that’s an interesting place to start. When we started, we were this

unique business. We sat right outside of Dan’s office. There was a lot of value being able to plug into that ecosystem. A lot of it, you know, just like HR and admin and payroll and accounting and tax and finance and benefits, and all of that, and also just the sort of larger corporate culture. So I started in June of 2015 and immediately went to an all-day event with thousands of other employees to learn about company culture. We were probably nearly a year and a

half into it when we started to make the distinction between StockX and Quicken. We were always close and that was very intentional as Dan (a co-founder and major investor of StockX) was very close to us. When I replaced myself as the CEO and Scott (Cutler) took over, he restructured all StockX corporate values. For the years before, we had our own set based on the “Isms.” See LUBER on Page 29

GOVERNMENT

From budgetary ‘shell game’ to stimulus windfall Executive Evans navigates brighter financial future for Wayne County after crisis BY CHAD LIVENGOOD

Six years ago, Wayne County Executive Warren Evans was whistling by the graveyard of municipal bankruptcy when he took over on the 31st floor of the Guardian Building. The former county sheriff inherited a $52 million annual structural deficit from his predecessor Bob Ficano, the county’s credit rating was junk-bond status and there was a rusting half-built downtown Detroit jail project that had already burned up $150 million of taxpayer money before Ficano pulled the plug on the project. “I heard everybody saying, ‘Well, they’ll use Detroit’s playbook and

they’ll file for bankruptcy and blah, blah, blah,’” Evans said last week in a wide-ranging interview with Crain’s in his Guardian Building office. “There was just no truth in budgeting at all. I mean, it was all a shell game.” Today, Michigan’s most populous county is far removed from budgetary shell games and the prospect of insolvency like the state of Detroit’s finances in 2013 when the Motor City sought Chapter 9 bankruptcy court protection from its creditors. After renegotiating labor contracts, freezing salaries and jettisoning certain programs, Wayne See EVANS on Page 28

Wayne County Executive Warren Evans, 72, is planning to seek a third four-year term in 2022. | CHAD LIVENGOOD/CRAIN’S DETROIT BUSINESS

Practitioners in the red-hot mergers and acquisition space have differing opinions on the potential impact of a recent executive order by President Joe Biden calling for, among other things, added scrutiny on “bad mergers.” The order, which aims to promote “competition in the American economy,” was signed July 9. It seeks to embolden federal regulatory agencies across a wide spectrum of industries, including health care and finance. “The executive order I’m soon going to be signing commits the federal government to full and aggressive enforcement of our antitrust laws,” Biden said in remarks ahead of signing the order. “No more tolerance for abusive actions by monopolies. No more bad mergers that lead to mass layoffs, higher prices, fewer options for workers and consumers alike.” But to those working in the M&A space around Michigan, which has been going gangbusters despite the economic hit of the COVID-19 pandemic, the impact of such policy shifts is still somewhat unknown. LaBine Additionally, the order “encourages” federal agencies like the Department of Justice and the Federal Trade Commission focused on antitrust issues “to focus enforcement efforts on problems in key markets and coordinates other agencies’ ongoing response to corporate consolidation,” according to a fact sheet from the Biden administration. It’s the use of language like “encourage” that has financial sources guessing that any major slowdown would be quite far down the road. Several experts, including Jeffrey LaBine, a corporate partner focused on mergers and acquisitions for the Detroit-based Miller Canfield Paddock & Stone PLC law firm, noted that the order by the Biden administration does nothing to change the underlying dynamics that drive corporate dealmaking. In fact, LaBine said that in the short term he expects companies to push forward with more merger activity out of an abundance of caution that the Biden administration might get more heavy-handed down the road. “You could see, in the short-term, some acceleration (of M&A activity),” LaBine said. “Longer-term, some additional kind of navigation planning and some additional speed bumps, but not dead ends. And they’re not dead ends simply because the drivers haven’t changed.” LaBine and other M&A attorneys contacted for this report were quick to note that at least so far, clients have not been racing to pick up the phone out of concern that the M&A market might implode. See M&A on Page 28 JULY 19, 2021 | CRAIN’S DETROIT BUSINESS | 3

REAL ESTATE INSIDER

Controversial Detroit real estate investor Dennis Kefallinos is listing for sale the former Southwest Detroit Hospital, two months after the city began moving forward with a move that would tear the vacant building at 20th Street and Michigan Avenue down. He is seeking $17.5 million. | KIRK PINHO/CRAIN’S DETROIT BUSINESS

Kefallinos asks $17.5M for former hospital city plans to raze tion, one has not yet been submitted. “The building is considered blight and BSEED (Buildings, Safety Engineering and Environmental Department) will continue to pursue City Council approval for demolition of the structure,” Peckinpaugh said. In May, Crain’s reported that City Council was requested to approve a recommendation that would have led to the former hospital being torn down. The owner of the property applied for demolition deferral in 2019 but has failed several inspections since, most recently March 9, Crain’s reported in May. Let’s see what’s next in this saga, although Peckinpaugh noted that a sale might be in the best interest of the property. “The city’s legal options depend upon the situation presented,” he said. “In this case, the prospect of a sale may be a good alternative. If Mr. Kefallinos lacks the resources necessary to get the property into compliance, a sale to a buyer with more resources could solve the problem. Regardless of who owns the building, it must be brought into “WE ARE STILL DEALING WITH THE CITY c o m p l i a n c e, REGARDING (DEMOLITION) DEFERRAL. WE and the city advance ARE GOING TO BE SUBMITTING A DEFERRAL will the demolition APPLICATION TO SEE IF WE CAN GET IT OFF process so long as any THE DEMOLITION LIST.” building pres— Ivory Moorer, associate broker, IJM Real Estate Services LLC ents a danger.” Most reBut the city says it’s still seeking to cently, Kefallinos’ huge building on tear down the property and, so far, East Warren Avenue started crumbling to the street below, prompting a isn’t budging. Bryan Peckinpaugh, a spokesper- road closure. (He bought the buildson for the city, said Kefallinos’ first ing at 1599 E. Warren Ave. in 2008 for request to remove the building from $125,000 and has it listed for $3.5 milthe demolition list on Oct 19, 2019, lion.) Who knows how much ball the city was denied April 13 because he “did not provide us a detailed timeline on is willing to play with him this time. But I digress. how they are going to develop this The former hospital was on a list of property and obtain a certificate of 30 properties totaling total more than occupancy.” He said that although a Kefallinos 2.3 million square feet that Kefallinos representative has inquired about a put up for sale in 2017. Kefallinos has been in Detroit real second demolition deferral applicaWith his abandoned Detroit hospital property yet again facing a city-ordered demolition, controversial Detroit landlord Dennis Kefallinos is tryKirk ing to sell it. PINHO The former Southwest Detroit Hospital at 2401 20th St. was put on the market the week of July 5, said Ivory Moorer, associate broker with Allen Park-based IJM Real Estate Services LLC, which is marketing the building for sale. He said the asking price is $70 per square foot, which at about 250,000 square feet puts it at about $17.5 million. “Right now we just got it on the market,” Moorer said. “We are still dealing with the city regarding (demolition) deferral. We are going to be submitting a deferral application to see if we can get it off the demolition list.”

4 | CRAIN’S DETROIT BUSINESS | JULY 19, 2021

and the Harvard Square building at 1346 Broadway St. ($6.25 million) to Dan Gilbert, who plans a mixed-use redevelopment.

Detroit Public Television lists Wixom property

The Riley Broadcast Center in Wixom, home of Detroit Public Television, is up for sale for $11.75 million and an adjoining 5.23 acres is on the market for $1.2 million.| COSTAR GROUP INC.

estate for decades. He’s been the target of widespread criticism for sitting on properties and delayed renovations or improvements to a slew of buildings he owns. The former hospital site has had a sign up for years with a rendering saying “Mixed-use development coming soon 2020.” The 250-bed Southwest Detroit Hospital opened in 1974 as a merger of four smaller hospitals to provide neighborhood care for low-income residents, according to Detroit Free Press archives. Unmanageable debt and bankruptcy came in 1991, reopening in the late 1990s as United Community Hospital under Ultimed HMO of Michigan, which paid $1.5 million for the building in 1996. Ten years later, Ultimed went bankrupt and the hospital has been vacant since. City land records show the property sits on about 5.6 acres and totals about 243,000 square feet with an assessed value of $1.66 million. Kefallinos’ property holdings across the city are vast. Among his more well-known assets are the Russell Industrial Center off I-75, which the city emptied in

February 2017 over safety concerns (some tenants were later allowed to return as fixes were made); a slew of residential buildings that have had numerous repair and maintenance issues over the years; the former Roosevelt Hotel in Corktown; the Michigan Building and former Michigan Theatre at 220 Bagley St.; and others. Over the years, Kefallinos has faced scores of lawsuits over issues ranging from housing discrimination complaints to a class-action lawsuit over leasing his residential buildings to tenants without certificates of occupancy to another lawsuit over how the dancers are paid at his Bouzouki strip club in the city’s Greektown neighborhood. In addition to his buildings in the city, Kefallinos also owns a large former Boy Scouts of America campground in Lupton about 10 miles from the Huron National Forest totaling 630 acres. He has also sold off assets in recent years, including Shapero Hall, the former Wayne State University pharmacy school building ($16 million) in Lafayette Park to a developer planning hundreds of residential units;

The Riley Broadcast Center in Wixom has hit the market for sale. Southfield-based Farbman Group has the listing on the Detroit Public TV-owned headquarters building at 1 Clover Court, west of Wixom Road and between Grand River Avenue to the south and I-96 to the north. The building is 93,500 square feet on 12.4 acres and on the market for $11.75 million, while another 5 acres is on the market for $1.2 million, according to marketing materials on the Farbman Group website. The precise future of the property is not known. DPTV could be looking for space elsewhere, or the building could be on the market as a sale-leaseback play, which would keep the organization in its current home as a tenant to a new landlord. I emailed Rich Homberg, president and CEO of DPTV, as well as left him a voicemail message. Brian Crawford, vice president for Farbman Group, deferred comment to DPTV on Tuesday morning. In the fiscal year that ended June 30, 2020, DPTV reported $18.2 million in revenue and $17.6 million in expenses. It reported $18.76 million in net assets and $7.58 million in liabilities. According to CoStar Group Inc., a Washington, D.C.-based real estate information service, DPTV paid $11.2 million for the building in 2004, for a purchase price of $119.73 per square foot. It is the former home of Clover Technologies Inc., a network-integration company that filed for bankruptcy in 2003, Crain’s reported at the time. Contact: kpinho@crain.com; (313) 446-0412; @kirkpinhoCDB

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GLOBAL | Over $3 billion annual revenue & multi-national operations Shohreh Abedi

Tyler Best

Sheryl Haislet

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Ryan Talbott

The Auto Club Group - AAA

Adient

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Tony Dean

United Wholesale Mortgage

Auto-Owners Insurance

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Bill Fandrich

CMS Energy & Consumers Energy Blue Cross Blue Shield of Michigan

Michael Hicks Emergent Holdings, Inc.

ENTERPRISE | Over $1 billion annual revenue Mark Baughman

Cathleen Curley

Ron Hinsley

Noah Kotch

Annette Marcath

Delta Dental of Michigan

University of Michigan - College of Literature, Science & Arts

ITC Holdings Corp.

Credit Acceptance Corporation

Health Alliance Plan

Amjed Al-Zoubi

LARGE CORPORATE | Over $300 million annual revenue Steve Collins

Matt Logar

Lesley Ma

Milos Topic

Amerisure Insurance

Great Expressions Dental Centers

Gentherm

NSF International

Grand Valley State University

Charles Caine

Elizabeth Klee

Pathik Mody

Carrie Shumaker

Darlene Taylor

Samaritas

Urban Science

Trion Solutions, Inc.

University of Michigan-Dearborn

Epitec

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Jason Joseph

Andrew Rosenberg

Ron Strachan

Daniel Waltz

Bronson Healthcare

Spectrum Health

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McLaren Healthcare

MidMichigan Health

SPORTS BUSINESS

Pistons giving courtside ticket holders a new perk — a bar New Jersey-based CURE Auto Insurance is sponsoring BY CHAD LIVENGOOD

Detroit Pistons ticket holders with premium courtside seats won’t have to venture into the concourse of Little Caesars Arena anymore for a beer, cocktail or food this coming season. The Pistons plan to open a full-service courtside bar three rows behind the basket by the visiting team’s bench, the first open-air bar of its kind inside an NBA arena, Pistons chief business officer Mike Zavodsky said. The bar will be called the CURE Insurance Courtside Club. CURE, a New Jersey-based carrier that recently entered Michigan’s auto insurance market, is the main sponsor of the four-year-old arena’s newest feature, which will be limited to fans with tickets in the courtside section of LCA in rows 1-3, Zavodsky said. Grey Goose Vodka will be a presenting sponsor with its logo placed in front of the bar itself. “It affords our courtside ticket holders the opportunity to not be displaced during the game,” Zavodsky said in an exclusive interview with Crain’s. “So you can go grab a drink, you can grab food and still be a part of the arena experience, excitement and atmosphere, without having to go into a club space, which is underneath or behind the seating section.” The courtside bar, which will have bartenders and food service, will force the relocation of fewer than 100 seats from the portable riser stands that are pulled out for additional seats during Pistons games. Those seats will be relocated to the opposite side of the court and ticketholders will get upgrades in their packages for the change, Zavodsky said. The CURE Insurance Courtside Club will sit where the hockey boards are located for Red Wings games and won’t be available for Wings games or concerts, Zavodsky said. Terms of the sponsorship deal with CURE Auto were not disclosed by either party. “I can’t comment on the financials, but I will say it’s a multiyear relationship — they’re going to be with us for quite some time,” Zavodsky said. The concept was born out of the pandemic over the past season as the Pistons played to limited crowds of 250 fans during the early winter months and 750 fans during the final spring weeks of the season as the state health department began easing restrictions on indoor gatherings, Zavodsky said. At this point, all COVID indoor capacity limits have been lifted for the 2021-2022 season, which begins in October. Zavodsky said the small crowd sizes made Pistons management rethink how to best use its space within the arena, which was designed for 20,332 seats for basketball games and 19,515 seats for Red Wings hockey games. “A lot of times buildings have just filled in as many seats as possible,” Zavodsky said. “And I think sometimes it’s taking a step back and thinking about what’s the best or most purposeful use and how do you create a better experience for people?” “... The setup we had (for COVID restrictions) made us look at the arena as a blank canvas and we said, ‘Hey, if you could reimagine or reinvent certain things, what would you? And this

was one of them,” Zavodsky added. Zavodsky was able to secure a sponsorship with CURE Auto Insurance through a previous working relationship with the insurer’s CEO, Eric Poe. In Zavodsky’s previous role as head of sales and marketing for BSE Global, the parent company of the Brooklyn Nets, Zavodsky inked a one-year sponsorship deal with Poe and CURE for the Nets’ final season in New Jersey, when sponsorships were a hard sell.

With the Pistons coming off two consecutive 20-win seasons, Poe said the sponsorships with the Pistons offer an opportunity to get brand recognition in the market. “I think there’s a lot of promising things going on with the Pistons,” Poe said in a recent interview with Crain’s. “So, I kind of believe in the model of buy low, sell high, and I feel like the Pistons are buy low right now.” Contact: clivengood@crain.com; (313) 446-1654; @ChadLivengood

The Detroit Pistons are adding a full-service courtside bar at Little Caesars Arena this coming season. | DETROIT PISTONS RENDERING

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JULY 19, 2021 | CRAIN’S DETROIT BUSINESS | 7

COMMENTARY

Vaccination lotteries don’t move needle on inoculations

NIC ANTAYA FOR CRAIN’S DETROIT BUSINESS

ov. Gretchen Whitmer’s MI Shot to Win vaccination lottery program isn’t doing much to convince vaccine-hesitant resistants to get inoculated. As of July 13, about 62.4 percent of Michigan resiDustin dents 16 or older have reWALSH ceived at least one dose of the vaccine. That’s an increase of less than 1 percentage point since Whitmer announced the lottery on July 1, when those 16 and older with one dose stood at 61.7 percent. With the highly transmissible COVID-19 delta variant metastasizing across the U.S. and vaccination rates in decline for months, the trend is worrisome. But it should be no surprise the governor’s lottery program is failing. These programs simply don’t produce the correct incentive. Not that it’s stopped many state leaders STATES WITH from trying. More than LOTTERY half of U.S. states are offering PROGRAMS ARE currently some form of lottery NOT program to incentivize OUTPERFORMING vaccinations — from $2 million in cash to STATES WITHOUT scholarships to, yes, guns. SUCH PROGRAMS. even But these programs fall short. States with lottery programs are not outperforming states without such programs. For instance, New Jersey has no vaccine lottery and doses it has administered have fallen 50 percent since May. In Michigan, doses administered has dropped about 75 percent since May. New Jersey has also fully vaccinated more than 70 percent of its adult population.

The governor’s office pointed me to a June Detroit Regional Chamber study showing among unvaccinated respondents 5.6 percent said a lottery would motivate them to get vaccinated. That wouldn’t be enough to reach Whitmer’s 70 percent of adults vaccinated goal, but it’s not zero. But so far, it hasn’t performed that well. The lottery, here and elsewhere, is a failure in understanding behavioral economics. Humans do react to financial incentives. But only when that money is guaranteed — like, say, a gift card once they’ve completed vaccination. For instance, a 2014 study on incentivizing chlamydia screening among students in the U.K. found gift cards work. The control group was given no financial incentive, and only 1.5 percent of the student population received a

screening. When a lottery with a prize of 200 British pounds was introduced, the rate climbed to 2.8 percent. When the population was offered a guaranteed five-pound gift card for screening, the rate jumped to 22.8 percent. The researchers also found over the twoyear study that the gift cards improved frequency of doctor visits and drug maintenance schedules for the students. Now, Michigan’s $5 million lottery program is cheaper. Spread that money evenly to the roughly 608,000 eligible residents needed to get to that 70 percent goal, and they’d get $8 and some change. Offering a $25 gift card would cost the state $15.2 million if everyone took it up. The other effective tool is far more controversial — mandates. Simply put. They work.

Houston Methodist in Texas mandated the COVID-19 vaccine for employees with a June 15 deadline. The health system survived a short-term lawsuit (a federal judge tossed the case immediately) and 153 employees were terminated or resigned over the mandate. But more than 99 percent of its 26,000 workers complied. Detroit’s Henry Ford Health System and Livonia-based Trinity Health both mandated the vaccine for workers, students and volunteers effective in September. At the time of its June 29 announcement, roughly 10,000 of Henry Ford’s 33,000 workers were not vaccinated. Assuming it follows Houston Methodist’s trend, one can assume 9,900 more people will be vaccinated due to that mandate. For Trinity, roughly 6,200 were unvaccinated at the time of its July 8 mandate announcement. Same math, another 6,100 get vaccinated. With other health systems to likely to follow suit, the state is inevitably going to get closer to that 70 percent goal. This author is not necessarily advocating for mass vaccination mandates, but they are going to happen in some contexts, and do work. In fact, of the unvaccinated surveyed by the Detroit Regional Chamber, 21.5 percent said they would get vaccinated if their work or school required it. Those odds are better than lottery and luck. Senior Reporter Dustin Walsh covers health care for Crain’s Detroit Business.

MORE ON WJR  Crain’s Executive Editor Kelley Root and Managing Editor Michael Lee talk about the week’s stories every Monday morning at 6:15 a.m. Mondays on WJR 760 AM’s Paul W. Smith Show.

COMMENTARY

The reviews are in: Film incentives still wrong for Michigan BY MICHAEL THOM

S Michael Thom is an associate professor at the University of Southern California’s Price School of Public Policy and adjunct scholar with the Mackinac Center for Public Policy.

ome legislators want to resuscitate Michigan’s defunct tax subsidies for film and television production — a program that once spent half a billion taxpayer dollars. That would be a colossal mistake. I should know. I’ve analyzed those incentives more than most. My first nationwide study examined whether they increased wages, employment, and economic outcomes. The verdict? Not by a long shot. I found temporary wage gains and few jobs were the best a state could hope for. I also found that the incentives did not increase the size of a state’s economy or attract

a larger share of the entertainment industry. In another study, I focused on the states that invested the most money on incentives to lure Hollywood out of Hollywood. Surely the big spenders fared better than everyone else. But the results did not change. And in a third study, I looked specifically at California, home to all things entertainment. Same result: generous incentives did not boost employment in any of the film and television-related job categories I scrutinized. But you don’t have to take my word for it. At least three other peer-reviewed studies arrived at the same conclusion. And academics are not the only skeptics. State governments are, too. Through the end of 2018, 23 states conducted independent evaluations of their film and television incentive programs. All 23 found that the incentives had a negative return on investment. Put another way: for each dollar spent, the incentive stimulates less than a dollar in new tax revenue. The only point of disagreement is how much less. Some states “only” lose about 60 cents on the dollar; others, including Michigan, lose or lost closer to 90 cents. Strangely, subsidy supporters, including stu-

dios, industry lobbyists, unions, and film office employees, ignore the evidence. After the Massachusetts Department of Finance determined that the state’s incentive lost approximately 85 cents on the dollar, the state’s film office executive director told Governing magazine that he was “gratified” by the outcome and that “the tax credit is working and doing what it was intended to do.” A year after a Virginia report found the state’s incentive lost between 70 and 80 cents on the dollar, the state’s film office director testified that the program was “super efficient.” Supporters claim that critics have it wrong. They say the incentives have a “multiplier effect” that produces far-reaching benefits as new production spending ripples through the economy. But that multiplier is closer to fiction than truth. A Georgia economic development official actually admitted to PolitiFact that he didn’t know how the state arrived at its estimated multiplier. Supporters also cite research that shows the incentives work. But that research is often funded by the industry, lobbyists, or government agencies with an obvious conflict of interest.

Write us: Crain’s welcomes responses from readers. Letters should be as brief as possible and may be edited for length or clarity. Send letters to Crain’s Detroit Business, 1155 Gratiot Ave, Detroit, MI 48207, or email crainsdetroit@crain.com. Please include your complete name, city from which you are writing and a phone number for fact-checking purposes. 8 | CRAIN’S DETROIT BUSINESS | JULY 19, 2021

A Los Angeles Times columnist discovered that a “glowing” report about California’s film incentive was sponsored by the Motion Picture Association of America, which the economic development group that authored the report failed to disclose. And some of the re- SOME STATES search is terribly “ONLY” LOSE flawed. The Michigan Economic Develop- ABOUT 60 CENTS ment Corp. commisON THE DOLLAR; sioned a 2009 study of the state’s film incen- OTHERS, tive — a study that touted the benefits INCLUDING but ignored the in- MICHIGAN, LOSE centive’s cost. Michigan already OR LOST CLOSER wasted nearly half a TO 90 CENTS. billion dollars subsidizing film and television productions. Taxpayers were left with little to show for it. Abandoning the tax incentive — as over a dozen other states have — was the right call. Resurrecting it is not.

Sound off: Crain’s considers longer opinion pieces from guest writers on issues of interest to business readers. Email ideas to Managing Editor Michael Lee at malee@crain.com.

OTHER VOICES

Entrepreneurship offers path to wealth for minority communities BY MICHELLE SOURIE ROBINSON

Certification is most suitable for firms seeking access to major corporations and governments and their respective supply chains. We ensure that our certified businesses are reviewed at least annually and must not only report all changes but must meet all criteria regardless of their size or tenure. Likewise, we routinely engage objective national experts to review our findings. So, you can count on the credibility of our certifications. Now in its 44th year, the MMSDC works tirelessly to help minority-owned businesses successfully develop their capacity and grow their operations through access to capital, markets and other resources — creat-

ing jobs and building generational wealth in communities of color. The ripple effects of this work are significant. In Michigan, approximately 1,200 certified MBEs — ranging from startups to multi-billion-dollar firms — generate $36 billion in annual economic output and 205,000 jobs. We remain committed to economic inclusion through vibrant and profitable business partnerships. We ask both corporate America, businesses of color, and all consumers to share in that commitment. Only then can we realize a level of true economic parity that benefits all communities in far less time than a few centuries.

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Just like you, we’re here for your employees.

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The Michigan Minority Supplier Development Council recently released a new analysis estimating that it will take more than three centuries to achieve economMichelle Sourie ic parity in miRobinson is nority communiPresident and ties based on the CEO of the current growth Michigan rate of the naMinority Supplier tion’s minority Development entrepreneurs. Council. Simply put, we must do better. And all of us — corporations, entrepreneurs, and everyday consumers — play a critical role. Over the past year, corporate America raised its voice loud and clear with renewed commitment to overcome racial inequity. While we applaud those sentiments, we offer that an even louder and clearer message would be delivered by long-range, intentional efforts to revamp supplier inclusion processes and establish significant goals for minority firms. Such an inclusive approach is among the most sustainable methods to truly impact racial inequity as it drives wealth creation for minority-owned businesses, their employees, their suppliers and ultimately impacts ALL communities for greater good. Let me be clear. Certified minority firms aren’t seeking a handout, but access to compete for real opportunities on a playing field that has been uneven and unjust for generations. Minority business certification works because minority business enterprises or MBE over-index in job creation for minority talent — not relegating such talent to lower-level roles but allowing them to fulfill key operational roles. MBEs must also drive greater MBEto-MBE spend, excluding only payroll and taxes from the opportunities for which they allow MBEs to compete. These actions strengthen the ecosystem for which minority certification was designed and create opportunity for the masses. Unlike well-meaning public check presentations, lucrative job experiences, investments and business opportunities drive tangible and sustainable impact. Why does this matter? Numbers don’t lie. Today, the median wealth or net worth of families by racial group is as outlined below:  Black family is $24,100  Latino family is $36,100  Asian family is $60,000  White family is $188,200 These numbers reflect as much as an 87 percent variance by race. Numbers for education, home ownership and wage/compensation follow similar patterns and for the most part, the patterns have not improved for more than 50 years and the disparity adversely impacts all communities. Sadly, we continue to repeat the same conversations about racial and economic equality that were raised in the 1960s, yet we’ve seen only a one-percent increase in the growth of minority-owned firms grossing more than $1 million in annual revenue over the past 50 years. Similarly, in that same timeframe,

the average minority spend goal that MMSDC is committed to identifying corporate America once had has not and vetting minority business enteronly remained stagnant at less than 5 prises. We certify firms based on three percent (excluding only payroll and main requirements: taxes), but is now divided among SADLY, WE CONTINUE TO REPEAT THE multiple ethnicities, plus women, SAME CONVERSATIONS ABOUT RACIAL veterans, LGBTQ, disabilities, and AND ECONOMIC EQUALITY THAT WERE other classifica- RAISED IN THE 1960S. tions. Corporations committed to inclu-  At least 51 percent minority ownersion stress the value of third-party cer- ship. tification in their procurement pro-  Active day-to-day management by cesses as their goal is to vet at least one qualified ethnic minority independently certified firms. engaged in daily operations. Through our certification process, the  Independence and control.

Conﬁ dence comes with every card.®

At Blue Cross Blue Shield of Michigan, we understand you want the best for your employees, which is why we offer a wide range of plans designed to fit any budget. Plans that give them access to the largest network of physicians and hospitals in Michigan wherever and whenever. We offer complete benefits with pharmacy, dental, vision and emotional well-being health for you and your employees. That’s the Blue Cross difference, which all adds up to smarter, better health care. See what a Blue Cross plan can do for your business.

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Blue Cross Blue Shield of Michigan and Blue Care Network are nonprofit corporations and independent licensees of the Blue Cross and Blue Shield Association.

BCB144280_MSG_Print_CrainsDetBusines_7-19_Inser_F1.indd 1

JULY 19, 2021 | CRAIN’S DETROIT BUSINESS | 9 7/7/21 10:27 AM

GETTY IMAGES/ISTOCKPHOTO

Mortgages, construction — and PPP, too This year’s Crain’s Fast 50 list reflects metro Detroit’s ascent to the top in mortgage business

t’s been a sizzling few years for metro Detroit’s mortgage business, and it’s apparent up and down our list of Fast 50 fastest-growing companies. For the first time, metro Detroit’s two mortgage giants, United Wholesale Mortgage and Rocket Companies, rank 1-2. But right behind them is Flagstar Bancorp, a full-service bank that has a sizable mortgage business. Recent years have been marked by historically low interest rates, which has made the mortgage business a profitable one. Rocket and UWM have both ridden that trend to keep growing quickly — and both rode it to the stock market in the past year. But a number of smaller institutions also appear on the list partly because of the mortgage business. Community banks like Arbor Bancorp (No. 48) also cited the mortgage business for their growth, along with revenue increases spurred by processing loans for the federal Paycheck

10 | CRAIN’S DETROIT BUSINESS | JULY 19, 2021

Protection Program rescue plan. A word on how we calculate this list, which in some ways differs from similar lists that look purely at a percentage revenue increase. Our list takes that into account, but we also rank the companies for which we have data by the dollar amount of their revenue increase. This is because in our estimation, scale matters, and driving big sales increases at a large, established company is no easy feat. So we rank each of the companies for which we have data from 2017 to 2020 on their percentage revenue increase, as well as ranking them on the dollar increase. We add up those rankings to produce the final list. Companies that do well on both scales do best. Profitability matters, too. We ask each company to attest that it has been profitable, because driving up revenue is easy if you’re selling at a loss.

we believe doing good grows business – fast. Why are we celebrating being named to Crain’s Fast 50 List? It all comes down to our hallmark principle to do it right. We are proud of our rapid growth and especially proud of the culture we’ve built from the inside out.

1. UWM Holdings Corp. (United Wholesale Mortgage) Pontiac 2020 revenue: $4.94 billion 2017 revenue: $1.09 billion % change: 354.8%

Dan Gilbert

Dollar increase: $3.85 billion Reasons for growth: The mortgage business has been historically strong, offering a massive opportunity for companies looking to take a bigger share of the fragmented market. In 2020, United Wholesale Mortgage achieved $182.5 billion in origination volume, 69 percent higher than UWM’s prior production of $107.8 billion for 2019. The company nearly doubled its head count from 4,900 employees in 2019 to 9,000 employees in 2020. United Wholesale became a publicly traded company in January.

2. Rocket Companies Inc. Detroit United Wholesale became a publicly traded company in January. | NEW YORK STOCK EXCHANGE

2020 revenue: $15.98 billion 2017 revenue: $6.56 billion % change: 143.6% Dollar increase: $9.42 billion Reasons for growth: Rocket, Dan Gilbert’s mortgage company formerly known as Quicken Loans, went public last August, netting $1.8 billion in an IPO. Rocket reported closed $320 billion in total loans last year, making it the nation’s largest mortgage company. Rocket went public last August. Like the other mortgage companies, Rocket has benefited from historically low interest rates in its aggressive expansion.

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11. George W. Auch Co. (dba Auch Construction) Pontiac 2020 revenue: $279.6 million 2017 revenue: $150.2 million % change: 86.1% Dollar increase: $129.4 million Reasons for growth: Auch Construction credits a scalable business model and controlled growth from its repeat clients in Southeast Michigan, which are primarily in educational, health care, municipal, commercial and higher education market sectors.

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Reasons for growth: Atwell has continued to diversify its focus in real estate and land development, power and energy, and oil and gas. The company has continued to broaden its services to include land solutions, geographic information systems, planning, survey, natural resources, engineering, and construction and program management. Atwell has recently expanded its presence in Texas and Florida and in the Pacific Northwest with a new office in Portland, Ore. Atwell has also grown its Southwest region, including Arizona offices in Scottsdale and Tucson. The company has continued to invest in Michigan with offices in Southfield, Ann Arbor, Shelby Township and Cadillac.

3. Flagstar Bancorp Inc. Troy 2020 revenue: $2.14 billion 2017 revenue: $860 million % change: 149.3% Dollar increase: $1.28 billion Reasons for growth: Business diversification, including strong growth in mortgage and warehouse lending, contributed to Flagstar’s growth.

4. Feldman Automotive Inc. New Hudson 2020 revenue: $1.29 billion

13. General RV Center Inc.

2017 revenue: $742.9 million

Wixom

% change: 74.0%

Flagstar Bancorp. saw growth through business diversification and strong growth in mortgage and warehouse lending.

Dollar increase: $549.4 million Reasons for growth: Auto dealership acquisitions have driven growth for New Hudson-based Feldman. Among others, Feldman has acquired Al Deeby Dodge in Clarkston and McInerney’s Chrysler Dodge Jeep Ram in Woodhaven.

5. Piston Group Southfield 2020 revenue: $2.88 billion 2017 revenue: $1.71 billion % change: 68.4% Dollar increase: $1.17 billion Reasons for growth: Organic and inorganic growth, with an emphasis on product and customer diversification, have helped the conglomerate owned by former Detroit Piston Vinnie Johnson expand. Piston Group, the holding company for Piston Automotive, Irvin Automotive, Detroit Thermal Systems and Airea, has also continued to see growth from the $175 million acquisition of Takata Corp. subsidiary Irvin Automotive Inc. in 2016. Growth is also attributed to the 2019 acquisition of Marion Industries, which added Honda as a key customer to the company’s portfolio.

Former Detroit Pison Vinnie Johnson owns Piston Group. | PISTON GROUP

6. McNaughton-McKay Electric Co. Madison Heights 2020 revenue: $1.34 billion 2017 revenue: $823 million % change: 62.2% Dollar increase: $512 million Reasons for growth: The electrical parts distributor continues to experience modest levels of organic growth, supplemented by strategic acquisitions to expand its footprint in the Midwest, Southeast and South Central United States. This provided the company with greater diversification in its customer base, said Don Slominski, CEO.

7. Domino’s Pizza Inc.

9. Agree Realty Corp.

Ann Arbor

Bloomfield Hills

2020 revenue: $4.12 billion

2020 revenue: $248.6 million

2017 revenue: $2.79 billion

2017 revenue: $116.6 million

% change: 47.7%

% change: 113.3%

Dollar increase: $1.33 billion

Dollar increase: $132.0 million

Reasons for growth: In 2020, Domino’s was positioned to take on the COVID-19 pandemic due to its delivery and carryout model. Domino’s introduced contactless delivery and contactless curbside pickup for carryout customers, which contributed to growth. The company also attributes last year’s growth to introducing two pizza products: the cheeseburger pizza and the chicken taco pizza. Domino’s had same store sales growth in the U.S. of 11.5 percent for the year and 4.4 percent internationally. The company opened 624 stores in 2020 and is now in 90 markets around the world.

Reasons for growth: The real estate investment trust, which concentrates on retail space, has invested over $3 billion in acquisitions since 2018, including over $1.35 billion during the pandemic in 2020, said Joey Agree, president and CEO. Its portfolio now spans about 1,300 properties in 46 states.

8. Credit Acceptance Corp. Southfield 2020 revenue: $1.67 billion 2017 revenue: $1.11 billion % change: 50.4% Dollar increase: $559 million Reasons for growth: The auto lender attributed its continued growth to increasing consumer loan originations.

10. Carhartt Inc. Dearborn 2020 revenue: $1.15 billion 2017 revenue: $752.1 million % change: 52.7% Dollar increase: $396.2 million Reasons for growth: The workwear brand has seen sales increases across all of its channels, including wholesale, direct-to-consumer and business-to-business. The workwear brand has also become something of a fashion icon.

2020 revenue: $1.22 billion 2017 revenue: $827.6 million % change: 47.7% Dollar increase: $394.4 million Reasons for growth: General RV’s continued growth is a result of growing market share in existing locations and higher demand for RVs. General RV also added two supercenters to its dealership group over the past four years.

14. Sun Communities Inc. Southfield 2020 revenue: $1.40 billion 2017 revenue: $982.6 million % change: 42.3% Dollar increase: $415.8 million Reasons for growth: “The demand for affordable home living in our manufactured home communities, as well as affordable vacationing in our RV resorts, is exceptionally strong,” said John McLaren, president and COO. Since 2018, Sun has opened eight new ground-up developments. In October 2020, Sun acquired Dallas, Texas-based Safe Harbor Marinas, the largest owner and operator of marinas in the world. This provides the company with entry into another high-demand industry where they anticipate strong future growth opportunities.

JULY 19, 2021 | CRAIN’S DETROIT BUSINESS | 13

30. InfuSystem Holdings Inc. Rochester Hills 2020 revenue: $97.4 million 2017 revenue: $65.5 million % change: 48.8% Dollar increase: $31.9 million Reasons for growth: The company has seen strong market demand for its infusion pumps, including those needed to treat COVID-19 patients, and increases in both medical equipment sales and medical equipment rental revenues. InfuSystem expanded its market share with national home infusion service providers and added new devices and product offerings stemming from new partnerships with medical device manufacturers. Continued market penetration in oncology has also contributed to growth.

31. Victory Automotive Group Inc. Walbridge has completed work for FCA. | WALBRIDGE

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% change: 34.1% Dollar increase: $315.8 million Reasons for growth: LaFontaine has grown to 22 auto dealership locations, seven body shops and nearly 1,700 employees through acquisitions and organic growth.

20. (tie) Walbridge

32. (tie) Oxford Bank Corp. Oxford Above, O’Brien Construction, based in Troy, saw increased demand in multi-tenant construction. At right, National Food Group in Novi.

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26. (tie) O’Brien Construction Inc.

2020 revenue: $131.7 million

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2017 revenue: $124.9 million

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2020 revenue: $106.1 million

% change: 44.6%

% change: 70.6%

2017 revenue: $65.2 million

Dollar increase: $55.7 million

Dollar increase: $54.5 million

% change: 62.7% Dollar increase: $40.9 million

Reasons for growth: Food distributors saw a massive increase in sales during the COVID pandemic as more people ate at home. “National Food Group remains laser-focused on feeding people, especially during COVID, where demand for food service and consumer items exploded,” said Sean Zecman, president. The company has seen growth from its Zee Zees brand of healthy snack foods for kids, which has delivered over 1.5 billion servings across schools and retailers nationwide.

2020 revenue: $112.4 million

Reasons for growth: Epitec has continued to make significant process improvements, concentrating on data visibility and analytics, and implementing companywide innovation to support a nationwide recruiting team which serves customers throughout the country. Examples include, scaling of immigration services, developing a background check and drug screening integration tool, remote-enabled tools and implementing artificial intelligence for resume import and formatting.

2017 revenue: $62.1 million

25. Kirco Manix

% change: 80.9%

Troy

Dollar increase: $50.2 million Reasons for growth: Level One Bank has grown through a combination of acquisition and organic growth. The bank doubled the size of its mortgage team in 2018. In 2019, Level One opened its first banking center in the Ann Arbor market. In 2020, Level One Bank opened a new banking center in Rochester Hills and finalized its acquisition of Ann Arbor State Bank. Additionally, Level One Bank was one of the region’s leading providers of the SBA’s Paycheck Protection Program, providing over $400 million in PPP loans to local businesses in 2020.

26. (tie) Arrow Strategies LLC

2020 revenue: $26.2 million

2020 revenue: $125.0 million 2017 revenue: $78.0 million

Southfield

% change: 114.2%

% change: 60.3%

2020 revenue: $59.0 million

Dollar increase: $14.0 million

Dollar increase: $47.0 million

2017 revenue: $32.5 million

Reasons for growth: Growth resulted from diversifying into out-of-state projects and building larger projects, said Douglas Manix, president. Major projects that have contributed to growth include American Axle’s visitor center in Detroit, the Mercedes Benz Financial Headquarters in Farmington Hills, and Webasto’s New Americas Headquarters in Auburn Hills.

% change: 81.5%

Reasons for growth: Noteworthy projects that have contributed to growth include the headquarters building for TCF Bank (now Huntington Bank) in Downtown Detroit (a joint partnership), the 220 West Congress Street renovation in Detroit (general contracting services), City Club Apartments Lafayette Park, a mixed-use apartment community in Detroit, and Detroit Metro Airport concessions projects that include a Jolly Pumpkin restaurant, among others.

Detroit 2020 revenue:$1.91 billion 2017 revenue: $1.50 billion % change: 27.5% Dollar increase: $412.3 million Reasons for growth: As automotive manufacturers move to electrification, Walbridge has seen growth as many of its customers require facility modifications and/or expansions, opening avenues to work with battery cell and microchip producers. Walbridge has also diversified into mission-critical and intelligent distribution facilities.

20. (tie) Level One Bancorp Inc. Farmington Hills

24. Epitec Inc.

28. National Food Group Inc.

Reasons for growth: Increased demand in multi-tenant construction, including both market rate and low-to-moderate income housing, has helped O’Brien grow, said Timothy O’Brien, president. O’Brien saw growth from new clients as well as its existing client base. The construction firm also expanded into Ohio and increased projects in the Detroit area. Notable projects include the Zen Apartments in Troy, the Eddystone Hotel in Detroit, and renovations of Coalition on Temporary Shelter’s Midtown site on Peterboro in Detroit.

Dollar increase: $26.5 million Reasons for growth: The staffing firm helped put more than 1,000 people to work during the COVID-19 pandemic, and its clients have experienced tremendous internal growth. Arrow also helped a large municipality execute COVID-19 mitigation strategies.

2020 revenue: $26.3 million 2017 revenue: $14.4 million % change: 82.8%

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Dollar increase: $11.9 million

2020 revenue: $180.6 million

Reasons for growth: Continued growth in business loans. In 2020, Oxford Bank Corp. was a strong participant in the SBA’s Paycheck Protection Program, providing $247 million in PPP loans per capita. Oxford Bank Corp. helped 1,350 businesses secure PPP loans.

29. MIG East LLC dba/ MIG Construction Detroit 2017 revenue: $12.2 million

32. (tie) H.W. Kaufman Group Inc./ Burns & Wilcox Ltd. Farmington Hills 2020 revenue: $2.45 billion 2017 revenue: $2.10 billion % change: 16.7% Dollar increase: $350 million Reasons for growth: “Organic growth through expanded capabilities and product offerings, strategic acquisitions and partnerships, as well as investment in hiring quality, revenue-producing talent” helped the global insurance company grow, said Kevin Heckman, CFO.

34. NYX Inc. Livonia 2020 revenue: $530.0 million 2017 revenue: $380.0 million % change: 39.5% Dollar increase: $150.0 million Reasons for growth: Growth has been the result of several acquisitions and organic growth with new programs, customers, products and geography. JULY 19, 2021 | CRAIN’S DETROIT BUSINESS | 15

35. (tie) Acro Service Corp.

40. FNBH Bancorp Inc. (First National Bank in Howell)

Livonia 2020 revenue: $446.4 million

Howell

2017 revenue: $354.1 million

2020 revenue: $26.8 million

% change: 26.1%

2017 revenue: $15.5 million

Dollar increase: $92.3 million

% change: 73.4%

Reasons for growth: Organic growth from existing clients and new accounts that were referred by its current client base.

Dollar increase: $11.4 million Reasons for growth: Organic growth helped the bank, as well as growth from participation in Paycheck Protection Program loans under the federal CARES Act.

35. (tie) Jim Riehl’s Friendly Automotive Group Inc.

41. Systems Technology Group (STG)

Warren 2020 revenue: $376.6 million

Belle Tire executives hold a ribbon-cutting ceremony for a remodeled automotive tech classroom in Indianapolis in June. | BELLE TIRE

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37. Oxford Companies

38. Atlas Oil Co.

2020 revenue: $168 million

Dollar increase: $79.3 million

Ann Arbor

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39. Belle Tire Distributors Inc.

Reasons for growth: Expansions have contributed to growth, the company said.

2020 revenue: $19.8 million

2020 revenue: $843.0 million

Allen Park

% change: 28.2%

2017 revenue: $9.7 million

2017 revenue: $691.3 million

2020 revenue: $403 million

Dollar increase: $37 million

% change: 104.3%

% change: 21.9%

2017 revenue: $325 million

Dollar increase: $10.1 million

Dollar increase: $151.7 million

% change: 24.0%

Reasons for growth: Oxford has seen growth from investing in the vibrant Ann Arbor economy. From 2017-2020, Oxford has seen growth particularly in its construction, HVAC, and maintenance and repair sectors.

Reasons for growth: Atlas Oil has invested heavily in core business unit expansion throughout its commercial, emergency services, oil field and supply, and trading divisions.

Dollar increase: $78 million

Reasons for growth: Growth from artificial intelligence, machine learning, data analytics and connected vehicle and mobility services. Systems Technology Group has achieved a 98 percent repeat business rate from existing clients, contributing to growth.

2017 revenue: $297.4 million

Reasons for growth: Growth from investing in and building new locations for the tire retailer.

2017 revenue: $131 million

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50. (tie) Wade Trim Detroit 2020 revenue: $84.5 million 2017 revenue: $68.1 million % change: 24.2% Dollar increase: $16.5 million Reasons for growth: Wade Trim has seen growth from federal, state, and local governments that are investing in the country’s infrastructure.

wth

50. (tie) BorgWarner Inc.

ning, le

Auburn Hills 2020 revenue: $10.2 billion 2017 revenue: $9.8 billion % change: 3.7% Dollar increase: $365 million The Moroun-owned Universal Logistics Holdings Inc. operates a logistics facility to supply a Jeep plant on Mack Avenue in Detroit. |UNIVERSAL LOGISTICS HOLDINGS

Detroit 2020 revenue: $17.4 million

42. (tie) Universal Logistics Holdings Inc.

2017 revenue: $10.4 million

Warren

Dollar increase: $7.0 million

2020 revenue: $1.39 billion

Reasons for growth: “Intentional growth has occurred both organically and inorganically,” said Steve Benedettini, president. “Organically, we added key talent that helped us win new clients and expand our wallet share with existing clients. We were also well-positioned to take advantage of the growth in the K-12 market, and we added two offices in new geographies.” The company also acquired three survey firms over the past three years which added 3D laser scanning and aerial mapping to its services.

2017 revenue: $1.22 billion % change: 14.3% Dollar increase: $174 million Reasons for growth: The trucking and logistics company controlled by the Moroun family has won several automotive logistics projects. In 2018 and 2019, the company made six acquisitions in the intermodal drayage space.

42. (tie) Chemico LLC Southfield 2020 revenue: $158 million 2017 revenue: $124 million % change: 27.4% Dollar increase: $34 million Reasons for growth: Chemico has seen significant growth from providing goods and services to a diverse array of market segments, including automotive, aerospace, defense and government, electronics and health care. The company has continued to expand the geographic footprint of its team members and facilities to support operations across North America.

44. University Bancorp Inc. Ann Arbor 2020 revenue: $69.1 million 2017 revenue: $50.9 million % change: 35.7% Dollar increase: $18.2 million Reasons for growth: High volumes of mortgage loan originations have contributed to growth at the community bank.

Reasons for growth: Organic growth, mergers and acquisitions, and venture capital investments have fueled growth. In 2020, BorgWarner acquired Delphi Technologies, a global provider of propulsion technologies. The acquisition contributed to both revenue and operating income.

45. Spalding DeDecker

% change: 67.9%

Data researched by Sonya D. Hill

Spalding DeDecker saw growth both organically and inorganically and added talent to win new clients. | SPALDING DEDECKER

48. Arbor Bancorp (Bank of Ann Arbor)

46. Cambridge Investors LLC

Ann Arbor

Troy

2017 revenue: $79.0 million

2020 revenue: $37.5 million

% change: 23.4%

2017 revenue: $25.7 million

Dollar increase: $18.5 million

% change: 45.9%

Reasons for growth: Bank of Ann Arbor’s growth over the period of 2017-2020 was a combination of organic growth and growth as a result of Bank of Ann Arbor’s extension of Paycheck Protection Program loans authorized under the CARES Act passed early in 2020.

Dollar increase: $11.8 million Reasons for growth: Cambridge Investors’ growth is attributed to an increase in the number of Planet Fitness clubs the company owns in Michigan and Ohio. It has also seen growth from its commercial real estate business.

2020 revenue: $97.4 million

49. Applied Imaging

47. Glassman Automotive Group Inc.

Southfield

2017 revenue: $72.0 million

2020 revenue: $79.8 million

% change: 23.9%

2017 revenue: $62.9 million

Dollar increase: $17.2 million

% change: 26.8%

Reasons for growth: From 20172020, Applied Imaging has grown revenue through acquisition, new business development, and promoting new product lines such as telephony, carrier services, document destruction, backfile conversion, and IT services. Diversifying its portfolio has opened doors with existing and new customers and has helped with its growth.

Dollar increase: $16.9 million Reasons for growth: Glassman has seen growth from increased demand in the car lines that it carries, including Subaru, Hyundai, Kia and Genesis. “They have now come into their own to where they’re gaining market share,” said George Glassman, owner. “Our used car volume has also exploded.”

2020 revenue: $89.2 million

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JULY 19, 2021 | CRAIN’S DETROIT BUSINESS | 17

CRAIN'S LIST | THE FAST 50 Ranked by combined revenue growth rankings, 2017-2020 COMPANY ADDRESS PHONE; WEBSITE

TOP EXECUTIVE(S)

COMBINED REVENUE GROWTH RANKINGS

REVENUE ($000,000) 2020/ 2017

REVENUE % CHANGE 2020-2017

3-YEAR % CHANGE RANKING

REVENUE GROWTH ($000,000) 2020-2017

REVENUE GROWTH RANKING

UWM HOLDINGS CORP. (UNITED WHOLESALE MORTGAGE) 1

Mathew Ishbia chairman, president & CEO

$4,938.6 $1,086.0

355%

$3,852.6

ROCKET COMPANIES INC. 2

Jay Farner vice chairman & CEO Dan Gilbert chairman & founder

$15,980.7 $6,560.0

144%

$9,420.7

FLAGSTAR BANCORP INC.

Alessandro DiNello president, CEO & director

$2,144.0 $860.0

149%

$1,284.0

FELDMAN AUTOMOTIVE INC.

30400 Lyon Center Drive East, New Hudson 48165 248-486-1900; feldmanauto.com

Jay Feldman chairman & CEO Dave Katarski COO, executive VP

$1,292.3 $742.9

74%

$549.4

PISTON GROUP 3 3000 Town Center, Suite 3250, Southfield 48075 (313) 541-8674; pistongroup.com

Vinnie Johnson founder, chairman & CEO

$2,876.3 $1,707.9

68%

$1,168.3

MCNAUGHTON-MCKAY ELECTRIC CO. 1357 E. Lincoln, Madison Heights 48071 248-399-7500; mc-mc.com

Donald Slominski Jr. CEO John Kuczmanski executive VP & CFO

$1,335.0 $823.0

62%

$512.0

CREDIT ACCEPTANCE CORP.

Kenneth Booth 4 CEO

$1,669.3 $1,110.0

50%

$559.3

DOMINO'S PIZZA INC.

Richard Allison Jr. president, CEO & director

$4,117.4 $2,788.0

48%

$1,329.4

AGREE REALTY CORP.

Joel Agree president, CEO & director

$248.6 $116.6

113%

$132.0

CARHARTT INC.

Mark Valade chairman & CEO

$1,148.3 $752.1

53%

$396.2

GEORGE W. AUCH CO. (DBA AUCH CONSTRUCTION)

Jeff Hamilton president Vince DeLeonardis CEO

$279.6 $150.2

86%

$129.4

ATWELL LLC

Brian Wenzel president & CEO

$183.0 $89.0

106%

$94.0

GENERAL RV CENTER INC.

Robert Baidas CEO Loren Baidas president

$1,222.0 $827.6

48%

$394.4

SUN COMMUNITIES INC.

Gary Shiffman chairman & CEO

$1,398.3 $982.6

42%

$415.8

ALLY FINANCIAL INC.

Jeffrey Brown CEO & director

$10,780.0 $8,322.0

30%

$2,458.0

ALTIMETRIK CORP.

Raj Vattikuti executive chairman

$142.5 $69.1

106%

$73.4

ORLEANS INTERNATIONAL INC.

Earl Tushman president & CEO Larry Tushman VP, secretary

$729.0 $500.0

46%

$229.0

CLARK HILL PLC

John Hensien CEO

$308.9 $193.6

60%

$115.3

PLANTE MORAN PLLC

James Proppe managing partner

$747.7 $520.9 5

44%

$226.8

WALBRIDGE

Michael Haller CEO John Rakolta III president

$1,912.3 $1,500.0

27%

$412.3

MULTI-BANK SECURITIES INC.

Jeff Maccagnone president David Maccagnone chairman & CEO

$117.6 $66.4

77%

$51.2

LEVEL ONE BANCORP INC.

Patrick Fehring Jr. chairman, president & CEO

$112.4 $62.1

81%

$50.2

LAFONTAINE AUTOMOTIVE GROUP

Michael LaFontaine chairman & owner

$1,241.0 $925.2

34%

$315.8

EPITEC INC.

Jerome Sheppard CEO Josie Sheppard president

$131.7 $77.2

71%

$54.5

KIRCO MANIX

Douglas Manix president

$125.0 $78.0

60%

$47.0

585 South Blvd. E, Pontiac 48341 800-981-8898; uwm.com

1050 Woodward Ave., Detroit 48226 313-373-7990; rocketcompanies.com

5151 Corporate Drive, Troy 48098 248-312-2000; flagstar.com

25505 W. 12 Mile Road, Southfield 48034 248-353-2700; creditacceptance.com 30 Frank Lloyd Wright Drive, Ann Arbor 48105 734-930-3030; dominos.com/index.intl.html 70 East Long Lake Road, Bloomfield Hills 48304 248-737-4190; agreerealty.com 5750 Mercury Drive, Dearborn 48126 313-271-8460; carhartt.com 65 University Drive, Pontiac 48342 248-334-2000; auchconstruction.com

Two Towne Square, Suite 700, Southfield 48076 248-447-2000; atwell-group.com 25000 Assembly Drive, Wixom 48393 248-349-0900; generalrv.com

27777 Franklin Road, Suite 200, Southfield 48034 248-208-2500; suncommunities.com Ally Detroit Center, Floor 10, 500 Woodward Ave., Detroit 48226 866-710-4623; ally.com 1000 Town Center, Suite 700, Southfield 48075 248-281-2500; altimetrik.com 30600 Northwestern Highway, Suite 300, Farmington Hills 48334 248-855-5556; orleansintl.com

500 Woodward Ave., Suite 3500, Detroit 48226 313-965-8300; clarkhill.com 3000 Town Center Suite 400, Southfield 48075 248-352-2500; plantemoran.com 777 Woodward Ave., Suite 300, Detroit 48226 313-963-8000; walbridge.com

1000 Town Center, Suite 2300, Southfield 48075 800-967-9045; mbssecurities.com

32991 Hamilton Court , Farmington Hills 48334 248-737-0300; levelonebank.com 4000 W. Highland Road, Highland Township 48357 248-887-4747; thefamilydeal.com 24800 Denso Drive, Suite 150, Southfield 48033 248-353-6800; epitec.com

101 W. Big Beaver, Suite 200, Troy 48084 248-354-5100; kircomanix.com

NOTES: 1. Became a publicly traded company in January. 2. Became a publicly traded company on Aug. 5, 2020. 3. Holding company for Piston Automotive, Irvin Automotive, Detroit Thermal Systems and Airea. 4. Succeeded Brett Roberts as CEO, effective May 3. 5. Fiscal year end June 30, 2018. 18 | CRAIN’S DETROIT BUSINESS | JULY 19, 2021

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Back Together And Better Than Ever For a company whose people are its greatest asset, having to send thousands of team members home to work remotely just over a year ago wasn’t easy for us. But as laptops closed, cars left the parking lots and Zoom meetings slowly replaced in-person meetings, a new kind of togetherness emerged. One that proved distance was no match for determination.

Nearly 5,000 new hires this past year Having held the position of No. 1 wholesale mortgage lender in the nation for six consecutive years, UWM set its sights on a new goal: No. 1 overall mortgage lender. That’s why we’re still hiring at an unprecedented rate, with most of our referrals coming from our own team members. And why, when leadership positions need to be filled, we dip into our own talent pool first — 1,400 promotions just this year.

Completion of a record-setting pedestrian bridge Along with expanding our workforce, we’ve been busy expanding our campus, too — filling it with the kind of perks and amenities you’d expect from swanky, West-Coast companies. After outgrowing our first building in Pontiac, we purchased an even larger one right across the street. In true UWM fashion, we went big — connecting the two buildings (and the thousands of team members in them) with what is now the world’s longest enclosed pedestrian bridge, complete with moving walkways.

Going public on the NYSE On January 22, 2021, our President and CEO, Mat Ishbia, stood on the podium of the New York Stock Exchange and rang the opening bell in recognition of taking the company public. As proud a moment as that was for him, it didn’t compare to how he felt when he made every team member an owner of UWM by giving them shares of stock in the company that same day.

The opening of the UWM Sports Complex Just down the road from our main campus is our newly acquired UWM Sports Complex. Formerly a mega indoor soccer arena, it serves both our team members and the community. Not only is it the perfect place to train our weekly incoming new-hire classes and host special meetings and events, but we also use it to kick up a little fun, too, since we preserved one of the four soccer fields original to the building. The complex even pulled double duty as an Oakland County COVID-19 vaccination site earlier in the year.

By putting our people first and giving them opportunities to grow in both their professional and personal lives, UWM knows the rest will take care of itself. And imagine, if we can accomplish all that we did when we were apart, just think of what we can do when we’re together. Interested in growing and succeeding with us? Put UWMCareers.com on your list of companies and opportunities to explore.

CRAIN'S LIST | THE FAST 50 Ranked by combined revenue growth rankings, 2017-2020 COMPANY ADDRESS PHONE; WEBSITE

TOP EXECUTIVE(S)

COMBINED REVENUE GROWTH RANKINGS

REVENUE ($000,000) 2020/ 2017

REVENUE % CHANGE 2020-2017

3-YEAR % CHANGE RANKING

REVENUE GROWTH ($000,000) 2020-2017

REVENUE GROWTH RANKING

O'BRIEN CONSTRUCTION INC.

Timothy O'Brien president

$106.1 $65.2

63%

$40.9

ARROW STRATEGIES LLC

Jeffrey Styers president & CEO

$59.0 $32.5

82%

$26.5

NATIONAL FOOD GROUP INC.

Sean Zecman president & CEO Jim Moore senior vice president

$180.6 $124.9

45%

$55.7

MIG EAST LLC DBA/ MIG CONSTRUCTION

Paul Jenkins Sr. CEO Brian Deming president

$26.2 $12.2

114%

$14.0

INFUSYSTEM HOLDINGS INC.

Richard DiIorio president, CEO & director

$97.4 $65.5

49%

$31.9

VICTORY AUTOMOTIVE GROUP INC.

Jeffrey Cappo president

$2,094.5 1 $1,760.3 1

19%

$334.2

H.W. KAUFMAN GROUP INC./BURNS & WILCOX LTD.

Alan Kaufman chairman, president & CEO Daniel Kaufman EVP, COO

$2,450.0 $2,100.0

17%

$350.0

OXFORD BANK CORP.

David Lamb president, CEO & director

$26.3 $14.4

83%

$11.9

NYX INC.

Jatinder-Bir Sandhu CEO

$530.0 $380.0

39%

$150.0

JIM RIEHL'S FRIENDLY AUTOMOTIVE GROUP INC.

James Riehl Jr. president & CEO

$376.6 $297.4

27%

$79.3

ACRO SERVICE CORP.

Ron Shahani president & CEO

$446.5 $354.1

26%

$92.3

OXFORD COMPANIES

Jeff Hauptman CEO

100

$19.8 $9.7

104%

$10.1

ATLAS OIL CO.

Sam Simon founder & chairman

101

$843.0 $691.3

22%

$151.7

BELLE TIRE DISTRIBUTORS INC.

Jack Lawless III CEO

106

$403.0 $325.0

24%

$78.0

FNBH BANCORP INC. (FIRST NATIONAL BANK IN HOWELL)

Ronald Long president, CEO & director

107

$26.8 $15.5

73%

$11.4

SYSTEMS TECHNOLOGY GROUP (STG)

Anup Popat chairman & CEO

109

$168.0 $131.0

28%

$37.0

UNIVERSAL LOGISTICS HOLDINGS INC.

Tim Phillips CEO & director

113

$1,391.1 $1,216.7

14%

$174.4

CHEMICO LLC

Leon Richardson CEO, chairman, president

113

$158.0 $124.0

27%

$34.0

UNIVERSITY BANCORP INC.

Stephen Ranzini president, CEO & director

116

$69.1 $50.9

36%

$18.2

SPALDING DEDECKER

Steve Benedettini president & CFO

119

$17.4 $10.4

68%

$7.0

CAMBRIDGE INVESTORS LLC

Thomas Purther CEO

120

$37.5 $25.7

46%

$11.8

GLASSMAN AUTOMOTIVE GROUP INC.

George Glassman president

134

$79.8 $62.9

27%

$16.9

ARBOR BANCORP (BANK OF ANN ARBOR)

Tim Marshall president & CEO

138

$97.4 2 $79.0

23%

$18.5

APPLIED IMAGING

Casey Lowery VP of operations John Lowery CEO

141

$89.2 $72.0

24%

$17.2

BORGWARNER INC.

Frederic Lissalde president, CEO & director

142

$10,165.0 $9,799.3

125

$365.7

WADE TRIM

Andrew McCune president & CEO

142

$84.5 $68.1

24%

$16.5

966 Livernois Road, Troy 48083 248-334-2470; obriencc.com

27777 Franklin Road, Suite 1200, Southfield 48034 248-502-2500; arrowstrategies.com 46820 Magellan Drive, Suite A, Novi 48377-2454 800-886-6866; nationalfoodgroup.com

422 W. Congress, Suite 400, Detroit 48226 313-964-3155; migconstruction.com

3851 West Hamlin Road, Rochester Hills 48309 248-291-1210; infusystem.com 46352 Michigan Ave., Canton Township 48188 734-495-3500; victoryautomotivegroup.com 30833 Northwestern Highway, Farmington Hills 48334 248-932-9000; hwkaufman.com

60 S. Washington St., Oxford 48371 248-628-2533; oxfordbank.com 36111 Schoolcraft Road, Livonia 48150 734-462-2385; nyxinc.com 32899 Van Dyke Ave., Warren 48093 586-979-8700; jimriehl.com

39209 W. Six Mile Road, Suite 250, Livonia 48152 734-591-1100; acrocorp.com 777 E. Eisenhower Pkwy, Ann Arbor 48108 734-747-6000; www.oxfordcompanies.com 24501 Ecorse Road, Taylor 48180 800-878-2000; atlasoil.com 1000 Enterprise Drive, Allen Park 48101 313-271-9400; belletire.com 101 E. Grand River, PO Box 800, Howell 48843 517-546-3150; fnbh.com

3001 W. Big Beaver Road, Suite 500, Troy 48084 248-6439010; stgit.com 12755 East Nine Mile Road, Warren 48089 586-920-0100; universallogistics.com

25200 Telegraph, Suite 120, Southfield 48033 248-723-3263; thechemicogroup.com 2015 Washtenaw Ave., Ann Arbor 48104 734-741-5858; university-bank.com 15 E. Baltimore St., Detroit 48202 313-309-7051; www.sda-eng.com 3001 W. Big Beaver Road, Suite 324, Troy 48084 248 822-5100; cambridgeinvestors.com 28000 Telegraph Road, Southfield 48034 248-354-3300; glassmanautogroup.com 125 S. Fifth Ave., Ann Arbor 48104 734-662-1600; bankofannarbor.com

24050 Northwestern Hwy, Southfield 48075 800-521-0983; appliedimaging.com

3850 Hamlin Road, Auburn Hills 48326 248-754-9200; borgwarner.com 500 Griswold St., Suite 2500, Detroit 48226 313-961-3650; wadetrim.com

Researched by Sonya D. Hill: shill@crain.com | This list is an approximate compilation of the fastest-growing companies in Wayne, Oakland, Macomb, Washtenaw and Livingston counties. NOTES: 1. Automotive News. 2. From 2020 annual

report.

Want the full Excel version of this list — and every list? Become a Data Member: CrainsDetroit.com/data 20 | CRAIN’S DETROIT BUSINESS | JULY 19, 2021

REDEVELOPMENT

Shipping container development to create home for pop-ups $450,000 project to start construction in September as part of commercial corridor plan BY ANNALISE FRANK

Construction is set to finish in October on a $450,000 shipping container development for pop-up entrepreneur space in Detroit’s Russell Woods neighborhood. The project on a city-owned vacant lot at the corner of Dexter Avenue and Tyler Street is among the city’s plans aimed at commercial corridor improvement in a cluster of neighborhoods on the west side. Russell Woods-Nardin Park is an area targeted under Mayor Mike Duggan’s Strategic Neighborhood Fund, a public-private investment machine aimed at revitalizing specific areas outside downtown. It started more than six years ago and has grown to 10 sectors, though the pandemic slowed progress. Efforts generally range from renovating buildings in shopping districts to bringing in new development, demolishing homes and improving streets. The retail center at 13200 Dexter Ave. will house around a half-dozen shipping containers that small businesses can temporarily occupy starting around next spring. The city plans around November to select a company or other entity to operate the space. Quasi-governmental development agency Detroit Economic Growth Corp. will help connect with small businesses to participate. The city has hired Kimberly Dokes of Dokes Design Architecture LLC as the architect on the project and KEO & Associates Inc. for construction. The pop-up containers are a mid-

A $450,000 shipping container development with pop-up retail space is set to start construction this fall in Detroit’s Russell Woods neighborhood. | CITY OF DETROIT

term plan for the site that may later be targeted for permanent development, said Katy Trudeau, acting director of Detroit’s Planning and Development Department. Also as part of the Russell Woods-Nardin Park plan, laid out in a framework document available on the city’s website, the city anticipates putting out a request for proposals this fall for development on an empty 5-acre site that was home

to the Birney Elementary School. It closed in 2009. Those interested in the neighborhood’s future should watch what happens with the substantial site. City planners see it as a “blank slate,” and “the largest contiguous parcel of vacant land that could act as an anchor for the neighborhood, providing amenities to residents, creating a safe route to nearby schools, and introducing a productive land

use,” the 2019 framework document says. There’s no definite plan for how the former school land should be used, Trudeau said. But the city has been looking into ideas submitted during community engagement, like housing, urban agriculture and solar. Another piece of the plan is complete: The city renovated Zussman Park for $850,000: $250,000 from

bonds and $600,000 raised through the Strategic Neighborhood Fund. Duggan and City Council member Janeé Ayers unveiled the park changes late Wednesday morning. They include a new playground, fitness equipment, art and picnic space. The arts were a focus for planning in the neighborhood where famous musicians have lived, including the Supremes and Dinah Washington. One of the Zussman updates is a mural by Mario Moore, an artist whose grandmother is activist Helen Moore. The city also expects to start $2.7 million in construction work next spring on Dexter Avenue, from Fullerton to Davison. Changes should be familiar to those who have seen updates made to other streetscapes including Kercheval Avenue, with protected bike lanes. Crain’s requested more information on costs. Four hundred homes in the area will also be demolished or secured for potential future, separately funded renovation under Proposal N, a $250 million bond-funded blight removal campaign that started this year. The Strategic Neighborhood Fund started in 2014, pouring more than $40 million into three sections of the city: Livernois/McNichols, Southwest/West Vernor and Islandview/ Greater Villages. The $130 million SNF 2.0 began in 2018. Contact: afrank@crain.com; (313) 446-0416; @annalise_frank

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Listing opportunities: Debora Stein at dstein@crain.com JULY 19, 2021 | CRAIN’S DETROIT BUSINESS | 21

THO

WAYNE COUNTY

Is the Guardian for sale? Maybe, for the right price, Evans says

County executive says he’d entertain idea of leaving skyscraper for more accessible space

BY CHAD LIVENGOOD

There’s not a “for sale” sign on the Guardian Building. But for the right price, Wayne County’s headquarters is effectively on the market again. Wayne County Executive Warren Evans said last week he’d “certainly entertain” an offer to buy the landmark 40-story Art Deco skyscraper at 500 Griswold St. “This building is not particularly good for customer service for a county office — it just isn’t,” Evans said in a wide-ranging interview with Crain’s on Tuesday in his office on the 31st floor of the Guardian Building. “Would I rather be in another building that was more accessible to the public and had better parking? Yes, I would.” But Evans isn’t going to let the Guardian go for a song. Wayne County owes $44 million on the $60 million in bonds Evans’ predecessor, Bob Ficano, and the Wayne County Commission floated in 2008 to buy the building from Detroit-based Sterling Group for $14.5 million and renovate it top to bottom. “I’m not married to this building, but I’m married to not going into the hole to get out of it,” Evans said. “If the right deal came along, I would certainly entertain it. But it would be a complicated one because (it would be) selling this at a time after the pandemic when we don’t even know ... what the value

Wayne County still owes $44 million on bonds due to be retired by 2055 for its 2008 purchase and renovation of the 93-year-old Guardian Building skyscraper at 500 Griswold St. in downtown Detroit. | COSTAR GROUP INC.

of office space is going to be going forward.” The future demand for Class A office space is uncertain after more than 16 months of work from home for downtown Detroit’s biggest private and public sector employers, including Wayne County itself. County workers have only recently begun returning to work in the Guardian Building on a case-by-case basis, and it still could be a “couple of months” before the tower is fully populated with office workers again, Evans spokesman Bill Nowling said. Based on what Wayne County owes

THOUGHT LEADERSHIP FORUM

on the 643,000-square-foot building, the remaining debt comes out to about $68.56 per square foot. That’s much lower than some recent sales of office buildings in and around downtown Detroit, including the UAW Human Resources Building that sold for $81 per square foot ($34 million) last year and the 28-story tower at 211 West Fort, which likely sold for $85 to $90 per square foot last fall. In late May, AT&T Inc. sold off a mostly vacant 20-story building at 444 Michigan Ave. at just over $28 per square foot ($15.5 million) for the approximately 551,500 square feet,

Crain’s reported July 9. The Guardian Building, an iconic structure in the central business district, was built for the former Union Trust Co. in the late 1920s as Evans part of Detroit’s burgeoning financial district before the Great Depression hit, according to Historic Detroit. The building’s first-floor promenade, which features a soaring three-story vaulted ceiling, was originally a bank lobby. It’s now retail and coffee shop space that’s open to the public. In 2015, the Bloomfield Hills-based turnaround firm O’Keefe LLC suggested in a pro-bono report that Wayne County move its offices to New Center, creating a government office campus with the state of Michigan at its Cadillac Place building in the former General Motors Co. headquarters. Evans, who took office in 2015 and was re-elected in 2018, has long been open to moving Wayne County’s headquarters out of downtown Detroit. After the O’Keefe report came out, the Evans administration tried marketing the Guardian Building for sale, but didn’t get any takers when $60 million was still owed on the bond debt tied to its headquarters.

“I would not be opposed to getting out of here at all,” Evans said Tuesday. “It’s a wonderful building. It’s a great, historic building. It’s just not good for our purposes at all.” Evans also said he would not favor using one-time federal stimulus funds to pay for the cost of moving into a different building. The Guardian Building has 16,555-square-foot floor plates and totals at least 662,000 square feet across its 40 floors, which includes a penthouse space that has been used for events. Parking is at a premium in the financial district, adding to the issues with accessibility for the motoring public. In 2010, Wayne County spent $14 million on the 1,450-space First Street Parking Deck at 621 First St. According to the Guardian Building’s leasing office, there’s about 42,000 square feet of office space and about 10,200 square feet of first floor retail and dining space available for lease. In 2018, the Evans administration brokered a deal to sell the all-glass bank building that hugs the Guardian Building’s eastern wall along Woodward Avenue to Birmingham-based Elia Group for $4.65 million. That building has since been renovated and now houses a Capital One Café ground floor coffee shop and bank branch. Contact: clivengood@crain.com; (313) 446-1654; @ChadLivengood

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MITIGATING BREACHES IN THE DIGITAL AGE Technology priorities from the C-suite are ever-evolving. Leaders from all industries manage a shifting list: Justin Rice leads embracing innovations and digital technology strategy transformation, for CBTS. accelerating multi-cloud strategies, attracting and retaining top technical talent and enabling more effective communication and collaboration. One priority, however, never changes: “I’m afraid of a breach that will cripple our business.” Leaders realize the value of a strong cyber security posture, with proactive organizations prepared to protect and defend against internal and external threats that are known to the security community. They also understand that their security vendors — whether they provide endpoint protection, e-mail protection, firewalls and more — are effectively protecting them against known threats in their respective areas. But what about the unknown threats?

Detecting and neutralizing unknown threats will be a critical discipline focused on helping leaders rest easy at night knowing the answer to the question: “Am I at risk of a breach right now?” Enter Managed Detection and Response (MDR) solutions from CBTS, designed to identify active threats across an organization and then respond to eliminate, investigate or contain them. MDR has increased in visibility and importance as organizations realize that no level of investment will provide 100% protection against threats, and as the scale and complexity of the security challenge becomes intractable for individual organizations regardless of size. Why should organizations invest in MDR? Few organizations have the expertise and infrastructure needed to protect themselves. And because technology leaders need to honestly answer the question: “If my IT team doesn’t work weekends and there is a security incident at 3 a.m. Sunday, what are the implications?”

consider adding to both security plans and budgets for years to come. You can never protect 100% against attacks, but you can: • Reduce the likelihood or impacts of a successful attack. • Receive full visibility across all assets in your organization, with context-aware alerts. • Expect continual updates with the latest threats and vulnerabilities. • Augment technology platforms with human intelligence for greater accuracy and value in your investment. • Respond to alerts based on business context because not every threat has the same value. • Deliver results. In closing, organizations approaching their next budget cycle should think about MDR, an advanced security service that provides threat intelligence, threat hunting, security monitoring, incident analysis and incident response. MDR isn’t your traditional SIEM — it’s the future of managed security services. To learn more, visit cbts.com/security.

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ARE YOU PREPARED TO HANDLE A RANSOMWARE ATTACK? You’ve undoubtedly seen the many news stories about companies whose data has been hijacked via ransomware. That’s because Quinn Damon is as of June 2021, Vice President at Lockton Companies. at least 292 U.S. organizations have been attacked. Although they target companies of all sizes and industries, major corporations tend to appear on the news — like the recent attack on JBS, the world’s largest meatpacker. The frequency and severity of these attacks is expected to increase, which means affected companies may face major business interruption losses. What will you do if yours is one of them? At Lockton, we recently analyzed 100 ransomware claims from clients that met certain reporting criteria. Here’s what we learned: Ransom payments • 45 percent of companies paid a ransom. • The average ransom payment was $1,450,000. • 40 percent of payments were in excess of $1,000,000.

Forensics and legal payments • 31 percent of companies reported forensics and legal expenses to their insurer(s). • The average forensics and legal expenses were $388,110. • 16 percent of expenses were in excess of $1,000,000. Business interruption • 12 percent of companies reported business interruption to their insurer(s). • Average business interruption loss reported was $5,005,297. • 66 percent of losses were in excess of $1,000,000. Take proactive measures Increased ransomware activity has driven Lockton and other insurance companies to analyze security controls in place at client organizations, looking for features that correlate to fewer claims. As a result, we suggest the following best practices to help you maintain your defenses against a ransomware attack: • Enable multifactor authentication (MFA) for all users, especially those with access to sensitive information and systems. • Regularly back up your system and store back-up files offline. • Regularly train employees on how

to identify phishing and spoof emails. Ensure they know the reporting process, particularly if they click on one. • Segment your network so not all critical applications or sensitive data are stored in one place. • Review access privileges. Who has system administrator rights? Do they need it? • Create an incident response plan. Regularly review, test and refine it as necessary. Find the right broker partner To ensure the best outcomes, you need a broker partner with ransomware expertise. They can offer cyber insurance, which is invaluable in protecting the balance sheet after an attack. Your broker must also be prepared to help you respond appropriately if you suffer an attack. Your broker should be focused on the system controls above to help you qualify for the broadest coverage possible. You may not be able to stop an attack, so you need the right partner by your side.

Is your network protected? It’s not if, but when you’re breached. Ransomware attacks are increasing and you need to be prepared. As your trusted partner, Lockton will ensure that you are ready and protected.

To learn more about how to protect your company, please contact Quinn Damon at dquinn@lockton.com.

JULY 19, 2021 | CRAIN’S DETROIT BUSINESS | 23

FOOD & DRINK

Local fast-food brands add meatless options to menu Detroit Wing Co., Little Caesars Pizza add new plant-based items to attract new customers “WE’VE HAD A LOT OF PEOPLE ASK IF WE’D DO A VEGGIE WING. WE KNOW SOME PLACES ARE DOING CAULIFLOWER, BUT WE DIDN’T WANT TO GO THAT ROUTE.”

BY JAY DAVIS

As more consumers look to alternatives to eating meat, a couple of local fast-food chains are doing their best to offer options. Detroit Wing Co. and Little Caesars Pizza in the last week have added meatless options to their menus. Detroit Wing Co., with 10 Michigan locations, is offering “Pretendies,” a plant-based version of its chicken tenders. Detroit Wing Co. has been working with Beyond Meat for about 18 months to introduce the Beyond Chicken Tenders, according to Detroit Wing Co. owner and founder Gus Malliaras. The “Pretendies,” made without GMOs, antibiotics, hormones or cholesterol, will be available until Aug. 8 or while supplies last, according to a news release. Little Caesars Pizza on Monday introduced its Planteroni pizza, made with Field Roast plant-based pepperoni. Field Roast produces artisanal plant-based meats and cheeses. An announcement of its partnership with Little Caesars is featured atop the home page of the company’s website. The Planteroni pizza with be available in major markets, including Los Angeles, New York City, Miami, San Francisco, Portland and Detroit, ac-

24 | CRAIN’S DETROIT BUSINESS | JULY 19, 2021

— Gus Malliaras, owner and founder, Detroit Wing Co.

Little Caesars’ Planteroni pizza and Detroit Wing Co.’s Pretendies are new meatless menu options.

cording to a news release. The global vegan meat substitute market is expected to reach $8.82 billion in revenue by 2027, according to a report from Allied Market Research. A variety of chains, including Burger King, Pizza Hut and Red Robin, have already jumped on the plant-based meat options train. Malliaras, who established Detroit Wing Co. in 2015, said the meatless move is a great way to expand its customer base. Detroit Wing Co. is the first local brand to partner with Beyond Meat. “We’ve had a lot of people ask if

we’d do a veggie wing,” said Malliaras, whose 10 Michigan locations are run by franchisees. “We know some places are doing cauliflower, but we didn’t want to go that route.” The Pretendies are available in quantities of six, eight and 12. The consumer price, according to the Detroit Wing Co. website, is comparable to that of regular chicken tenders. But they carry a higher cost to the restaurant: The Beyond Meat tenders are $6.80 per pound, compared with $2.89 per pound for chicken tenders. “I think that’s pretty common with specialty food products because of

development and other things,” Malliaras said. If the item is added to the menu permanently, the pricing will be adjusted, Malliaras said, Little Caesars lists its Planteroni pizza at $8.49 while a large, round pizza with meat-based pepperoni costs $6. Customers also have the option to add the plant-based pepperoni as a topping on any pizza. Field Roast said it is the first pepperoni alternative on the market made with pea protein, not soy; it’s made with fresh spices including whole pieces of fennel, cracked black pepper, garlic and paprika. Little Caesars is the first national pizza chain to offer it broadly in the United States. “This is a huge moment for pizza lovers because for the first time, they have access to a zesty, bold, plantbased pepperoni made with pea protein that absolutely delivers on taste,” Dan Curtin, president of Greenleaf

Foods and owner of the Field Roast brand, said in a statement. A Little Caesars representative did not respond to requests for additional information. The products are a great option for customers who may be going meatless for a variety of reasons, Malliaras said. There is no cholesterol in the Beyond Meat offerings, but there is more sodium, Malliaras said. The Planteroni pizza is just 30 calories less than that of a regular Little Caesars pepperoni pizza. “Any time you’re trying to make something taste like something it’s not, sodium will be in there,” said Malliaras, who plans to open Detroit Wing Co. locations in Allen Park, Brighton, Sterling Heights and Traverse City later this year. “You’re manipulating the flavor of it. Everybody has their own reasons for eating plant-based.” Contact: jason.davis@crain.com (313) 446-1612; @JayDavis_1981

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If Ross and the Ilitches do align on this project, it's as yet unclear exactly where it would go — other than, generally, behind the Fox Theatre. In a statement Wednesday, Ross said a new location for the Detroit Center for Innovation would have more land available than the "fail jail" site that it was going to share with Bedrock. "I am more committed than ever to deliver my vision of an innovation hub in my hometown, and I reaffirm my commitment to the people of Detroit and the University of Michigan to create inclusive growth that propels job creation, affordable housing development and historic preservation for all Detroiters," Ross said in the statement issued by his New York-based Related Companies. "We're planning to move the DCI to a new location in the city with more space to ensure that we deliver." Ross and his Related Cos. people also considered the UAW-GM Center for Human Resources property on the Detroit riverfront before it was sold in October for $34 million to an investment group, a source told Crain's. The four square blocks just west of the Fox — bounded by Park Avenue, the Fisher service drive, Clifford Street and Adams Avenue — appear mostly empty, lined with Olympia-owned surface parking

Ross focused on Detroit Much is unknown. But what is clear is Ross' intention to invest in Detroit, even outside UM. Ross is also involved in a smaller project less than a mile northwest of the Fox Theatre, still in The District Detroit area, Crain's reported in late June. He and Detroit-based The Platform LLC are planning a new housing development on about an acre at Charlotte and Third streets with 75 apartments and parking. When the UM project was first announced in October 2019, Rocket Companies Inc. Chairman Gilbert and Ross vowed to build an iconic structure to house a UM graduate school for high-tech fields of automotive mobility, artificial intelligence, sustainability, cybersecurity and financial technology. They also detailed plans to build mid-rise residential buildings for UM graduate students, incubator space for new tech businesses and a boutique hotel and conference center inside the former Detroit Police Department headquarters on Beaubien Boulevard, which Gilbert's Bedrock real estate development company owns. Gilbert acquired the former jail construction site at Gratiot Avenue and I-375 in a deal with Wayne County that has Bedrock building a new criminal justice complex on another piece of property along I-75 and Warren Avenue. Bedrock CEO Kofi Bonner said Wednesday in a statement that the vacant Gratiot Avenue site is instead now slated to house what he referred to as an "innovation district" that is "dedicated to driving economic transformation and creating pathways for Detroiters into future high-growth industries."

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Response Due: August 18, 2021

Issued: July 14, 2021

Career Services and Readiness Training (CSRT) RFP Response Due: August 2, 2021

Issued: July 2, 2021

The Mayor’s Workforce Development Board (MWDB) is directly responsible and accountable to the State of Michigan, Labor and Economic Opportunity-Workforce Development (LEO-WD) for the planning and oversight of talent development programs in the City of Detroit. Designated by the MWDB, Detroit Employment Solutions Corporation (DESC) serves as the fiscal and administrative entity that provides workforce services to job seekers and employers. DESC’s primary funding streams include Workforce Innovation and Opportunity Act (WIOA), Temporary Assistance to Needy Families (TANF) that funds Michigan’s PATH (Partnership. Accountability. Training. Hope.) employment program, Food Assistance Employment and Training (FAE&T), Wagner-Peyser Employment Services (ES), and other public and private funding. The Corporation enters into contracts with qualified entities to provide workforce development programs and services to job seekers and employers. DESC is seeking proposals from qualified individuals, organizations and/or firms for: Programmatic and Fiscal Monitoring Services and Career Services and Readiness Training.

Bid package for this RFP is available for download at this DESC website: https://www.descmiworks.com/opportunities/rfps-and-rfqs/. Mayor’s Workforce Development Board Cynthia J. Pasky, Co-Chairperson David E. Meador, Co-Chairperson

Detroit Employment Solutions Corporation Board Calvin Sharp, Chairperson Detroit Employment Solutions Corporation Terri Weems, President

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September 2, 2019 | crainsdetroit.com

40 40

Dandridge Floyd, 37

UNDER

Assistant Superintendent of Human Relations and Labor Relations, Oakland Schools

hroughout Dandridge Floyd’s careers — whether as a social worker, attorney or assistant superintendent of Oakland Schools — making change has always been a center point. When United Way pitched a framework to Oakland Schools for a countywide breakfast program to address poor nutrition as a way to improve academic achievement, Floyd — who experienced food insecurity growing up — knew firsthand the powerful impact it could have. To secure the needed funds, Floyd led a team that earned support from all 28 local districts to finance the program — despite the fact that a majority of them would see no benefit. “The local districts were phenomenal,” Floyd said. “The biggest surprise was how quickly it happened. Education is a democratic system and democracy can be very slow, but this happened in six to seven months. That showed how committed people were to making sure the students of Oakland County have everything they need to be successful.” In a county where over 7,000 children suffer from hunger, and only two in five eligible students access a school breakfast, Floyd said a common misperception is that “Oakland County is rich.” “That makes this program all the more important, because if that is the bias or the thought process people have about Oakland County, then these kids would have never gotten help.” In a groundbreaking public/nonprofit partnership between the Oakland County Board of Commissioners, Oakland Schools and United Way, Oakland County is Better with Breakfast was born. “I’m impacting lives now,” Floyd said. “I know the effect food insecurity had on me and my peers growing up, and this was an opportunity to make a change that I wish an adult could have made for me.” — Laura Cassar

October 30, 2017 | crainsdetroit.com

UBS to open downtown Detroit office By Annalise Frank

October 30, 2017 | crainsdetroit.com

• UBS plans to open wealth management office in Detroit in mid-2018 • Office to include 6,000-squarefoot space30,nonprofits and civic October 2017 | crainsdetroit.com

UBS to open downtown Detroit office By Annalise Frank

groups • UBS plans to open wealthcan use free of charge • Bedrock-owned buildings

office in Detroit “I’m impacting lives now. management I know undergoing renovations

UBS to open downtown Detroit office

in mid-2018 6,000-squarethe effect food insecurity• Office had onto includeUBS plans to open an office in downfoot space nonprofits and civic town Detroit in mid-2018, the company Annalise Frank growing groups meByand my peers up, andcan useannounced free of charge Monday. • Bedrock-ownedUBS buildings Group AG’s U.S. and Canadian UBSan plans to open wealth this•was opportunity toundergoing make a renovations wealth management business, New Jermanagement office in Detroit sey-based Wealth Management change I wish an adult UBScould plans to open an office UBS in downin that mid-2018 Americas, to lease 13,000 square UBS will lease 13,000 feet from Bedrock LLC starting around mid-2018 in two buildings: the Grintown Detroit in mid-2018, theplans company • Office to include 6,000-squarefeet on the connected sixth floors of nell Building (center left) at 1515 Woodward Ave. and the Sanders Building (center right) at 1529 have made for me.” announced Monday. foot space nonprofits and civic buildings at 1515 Wood- Woodward Ave. Group AG’sneighboring U.S. and Canadian groups can use free UBS of charge ward Ave. and Fourteen metro Detroit employees don’t really have adequate resources wealth management business, New 1529 Jer- Woodward Ave. • Bedrock-owned buildings The twoManagement buildings built around 1900 are will move to the downtown office to or adequate office space to host dosey-based UBS Wealth undergoing renovations by Detroit-based will lease LLC 13,000 feet from Bedrock LLC starting around mid-2018 buildings: Grin- meetings or things nor events the or board start, but the office has the capacity toin two Americas, plans toowned lease 13,000 square UBSBedrock nell Building (center at 1515 Woodward andnew the Sanders Buildingalong (centerthose right) at 1529 Bush said. and are undergoing said left) lines,” hold another six toAve. eight staff memon inthe connected sixth floors of renovations, Reprinted with permission from Crain’s Detroit Business. © 2019 Crain Communications Inc. All RightsUBS reserved. plans to open anfeet office downAve. for bers, Bush said. It will act as an extension John Bush, 60, WoodMichiganWoodward market head UBS’s investment in the new ofneighboring buildings at 1515 Further duplication without permission is prohibited. Visit www.crainsdetroit.com. #CD1134 town Detroit in mid-2018, the company UBS Wealth ManagementFourteen Americas.metro of fice will resources be “significant,” he said, as its the other wealth management offices. don’t really have adequate Detroit employees announced Monday. ward Ave. and 1529 Woodward Ave. “The real impetus open atonew The twoCanadian buildings built around 1900 arefor us “uniqueness Bush is based Birmingham office space to hostcomes do- at a price.” He said willto move the downtown office out to ofortheadequate UBS Group AG’s U.S. and office inBedrock Detroit is to support what’s owned by Detroit-based LLC he could or not yet provide an estimate but travels to to the will meetings norothers eventsand or board things start, but the goofficeoffice, has the capacity wealth management business, New Jering renovations, on in the city, ” saidhold Bush, a Detroit and are undergoing said on the be spending in thealong Detroit branch. those lines,” Bush said.cost of the build-out, as some another six to eight new stafftime memsey-based UBS Wealth Management nativemarket who grew City. “We John Bush, 60, Michigan headup forin Garden have yet The location have atheless UBS’s investment in the new of- to be finalized. said. will act asDetroit an extension fromBush Bedrock LLCItstarting around mid-2018 in twowill buildings: Grin- contracts Americas, plans to lease 13,000 square UBS will lease 13,000 feetbers, UBS Wealth Management Americas. really felt like we wantedofto have a physfice will be “significant,” hecompany said, as its the other wealth management offices. The plans to start its buildtraditional, more “urban” feelright) than 1515 Woodward Ave. and the Sanders Building (center atthe 1529 feet on the connected sixth floors of nell Building (center left) at “The real impetus for us to open new ical presence downtown to reinforce “uniqueness comes at saidnext year, depending Bush is based outothers, of the he Birmingham outa price.” processHe early said. New York-based architecAve. a neighboring buildings office at 1515 Wood- toWoodward in Detroit is our support go-particular vision what’s for this areatravels and toture he will could not yet an estimate office, but the firm others and will Cale on when renovations on the buildings Verderame design the provide ward Ave. and 1529 ing Woodward don’t really have adequate resources Fourteen metro Detroit employees on in theAve. city,”tosaid Bush, a Detroit reinforce our on Barton the cost of the build-out, as some be spending time inspace; the Detroit branch. are complete. Southfield-based Malow The two buildings builtnative around 1900 areup in adequate office space to have host dowill moveCity. to tothe officelocation to or will who grew Garden “Wedowntown commitment contracts finalized. The Detroit have aon less based in Switzerland, employs Co. has signed as general contractor.yet to beUBS, owned by Detroit-based Bedrock nor events or board or things start, thea physoffice has the capacity really felt likeLLC we wanted tobut The company plans to startacross its buildtraditional, moreto“urban” than the outmeetings the city. ” have 60,000 54 countries. About 34 UBS feel plans to rent about half of the and are undergoing renovations, along those lines,” Bush said. early next year, depending hold six to eight new he staff memical presencesaid downtown toWealth reinforce others, said. New office York-based architecUBS another — 6,000 square out feetprocess — at no cost percent of them work in the AmeriJohn Bush, 60, Michiganour market head UBS’s investment the renovations new of- on the buildings bers, said. It will act an extension vision for for thisMparticular oninorganizations, when tureasfirm VerderametoCale will design theother a n aBush g e marea e n tand cas, according to a news release. UBS nonprofits and UBS Wealth Management will beMalow “significant,” he said, as its of the other also wealth management offices. ficeBarton to Americas. reinforce our Americas are be complete. space; Southfield-based Bush said. The space will called UBS Wealth Management Americas em“The real impetus for commitment us to open a new “uniqueness comes at a price.” He said is based thehas Birmingham to has Bush based signed on as Woodward general contractor. metro De- out ofCo. ploys 280employs in Michigan, 225 of whom Gallery. Its UBS, design and in artSwitzerland, office in Detroit is to support what’s go- office, but travels to theUBS heabout couldhalf not an estimate others and the city. ” 60,000 across 54 countries. 34 Detroit. plans towill rent will out of yet the provide troit offices in are basedAbout in metro aim to showcase Detroit’s history ing on in the city,” said Bush, on the cost the build-out, asthem somework in the Amerispending Detroit branch. UBS a Detroit Wealth B be percent office — 6,000 square at noofcost irm i n g h a time m , in the The wealth management business andfeet a— hub-and-spoke layout ofwill renative who grew up in Garden contracts have yet tocas, be finalized. M a n a gCity. e m“We e n t Troy, The Detroit locationtowill have a and less other UBS according to a news release. nonprofits organizations, Farmington recorded operating income of $2.13 flect the city’s road system. really felt like we wanted to have a physAmericas also Hills, start its buildThe company plans to “urban” traditional, more feel than the Wealth Management Americas emBush said. The space will be called Plymouth “Some of theUBS organizations that op- billion in the third quarter of 2017 — a ical presence downtown reinforce has tometro De- others, he said. New York-based outdesign process early year,280 depending architecploys in Michigan, 225 of whom Woodward Gallery. Its and art next John Bush erate and Dearborn. and provide services in the city 7 percent increase over last year. our vision for this particular area and troit offices in ture firm Verderame Cale when renovations the buildings the onDetroit’s in metro Detroit. willwill aimdesign to showcase history areonbased to reinforce our B i r m i n g h a m , space; Southfield-based complete. Malow arelayout The wealth management business andBarton a hub-and-spoke will reReprinted with permission from Crain’s Detroit Business. © 2019 Crain Communications Inc. All Rights reserved. commitment to Troy, Farmington Co. has signed on as general UBS, basedis prohibited. in Switzerland, employs income recorded operating contractor. flectFurther the city’s road without system. duplication permission Visit www.crainsdetroit.com. #CD936of $2.13 Hills, Plymouth the city.” billion in About the third “Somehalf of the organizations that op60,000 across 54 countries. 34quarter of 2017 — a UBS plans to rent out about of the John Bush and Dearborn. UBS Wealth 7 percent and provide city work percentinofthe them in theincrease Ameri-over last year. office — 6,000 squareerate feet — at no cost services Management to nonprofits and other organizations, cas, according to a news release. UBS Reprinted with permission from Crain’s Crain Communications Inc. All Rights reserved. Americas also Wealth Management Americas emBush said. The space will be Detroit calledBusiness. UBS © 2019 Further duplication without permission is prohibited. Visit www.crainsdetroit.com. #CD936 has metro DeWoodward Gallery. Its design and art ploys 280 in Michigan, 225 of whom troit offices in will aim to showcase Detroit’s history are based in metro Detroit. Birmingham, The wealth management business and a hub-and-spoke layout will reCRAINSDETROIT.COM I MARCH 9, 2020 I Troy, Farmington recorded operating income of $2.13 flect the city’s road system. THE CONVERSATION Hills, Plymouth “Some of the organizations that op- billion in the third quarter of 2017 — a John Bush erate and provide services in the city 7 percent increase over last year. and Dearborn.

Bedrock LLC

Many possible scenarios

lots. But there are challenges to such a large development as Ross has proposed with the UM center. The blocks are dotted with buildings and empty lots owned by others, including Freda Alibri; Barbara Ware and Suzon Dumas; Dan Kachadourian and others, according to city property records. There is a Detroit Fire Department building just a block west of the Fox and the Park Avenue House owned by Mario Kiezi just north of that. The 16 Ilitch-owned lots in those four blocks total just more than 3 acres, city records show, and those are interspersed with the other owners in several cases. This could necessitate a variety of solutions: Perhaps the project would end up smaller than the original 7 acres proposed, fitting piecemeal into several blocks. It could require substantial land acquisition and/or it could contemplate using land that's not really "behind" the Fox: a larger, 3.7-acre Ilitch-owned lot that's farther west along Grand River Avenue, for example.

Bedrock LLC

potential deal. “There’s a long history with the Ilitches of not only presenting pretty drawings and press releases, but also supposed partnerships and development deals with real estate projects, and I can't think of the last one that has actually seen the light of day in terms of a real estate partnership project.” Tensions led to the folding of an operation between the Ilitches' Olympia Development of Michigan and American Community Developers, as Crain's reported in 2019. U.S. Rep. Rashida Tlaib, D-Detroit, said in a statement that she's wary that mistakes of the past may be repeated. “It’s well known by now that the Ilitches have totally failed to deliver the development they promised and at this point we can only believe it when we see it," Tlaib told Crain's. "I hope we won’t repeat our mistakes and give away millions of public dollars to billionaires who can afford their developments on their own. We were promised affordable housing and instead got more for-profit parking lots with little to no landscaping inside them—despite the fact they’re required under the city’s zoning code."

REAL ESTATE

Bedrock LLC

This area of The District Detroit behind the Fox Theatre was planned to be a neighborhood called Columbia Park. | KIRK PINHO/CRAIN’S DETROIT BUSINESS

PHOTOGRAPH BY JACOB LEWKOW FOR CRAIN’S

dotted through with several others. It depends how the innovation center would be configured, and there are no details there yet. Representatives for Olympia Development did not respond to inquiries on Ross' interest. A representative for Ross did not respond to a query Thursday morning.The city of Detroit declined to comment through a representative, deferring to the developers. Denise Ilitch, a UM board regent who is not involved in the day-today operations of her family's business, said in a statement that she has recused herself from "all discussion of a potential new site for the Detroit Center for Innovation and, ultimately, voting on anything to do with this project." If the Ilitches and Ross did make a deal — something that's nowhere near written in stone, at least publicly — it would be considered by many as a win in The District Detroit. The sector north of the downtown financial district was proposed by the Ilitch family in 2014 as a lively entertainment district anchored by its nearby Little Caesars Arena, with hundreds of new residential units, restaurants, shopping and green space. But it's received blistering criticism for not delivering. To date, no new residences have been built there and much of the 50 blocks that the area consists of — largely Ross under Ilitch ownership — remains surface parking lots and unoccupied, boarded-up buildings. Multifamily projects floated four years ago have flagged seemingly indefinitely, minus the Hotel Eddystone redevelopment, which began only after the city forced a new agreement. The Ilitch organization has met all of the milestones required on that project so far and say it is on track to complete it by year's end. The UM innovation center idea, originally unveiled as costing $300 million on 7 acres, may need to change shape if it is to fit into a new home. "I think the neighborhood behind the Fox, this could be a welcome location for the innovation center, considering you’ve got the other investments that have been made (nearby)," including the Mike Ilitch School of Business at Wayne State University and Beacon Park, said architect Rainy Hamilton Jr., founder of Detroit-based Hamilton Anderson Associates Inc. "I think it could be the makings of a win-win." Hamilton said it "could be an outstanding move" that would bring Ilitch-owned surface parking lots into active development use. However, there's also skepticism. Francis Grunow, former chair of the now-dissolved Neighborhood Advisory Committee for The District Detroit, said he's seen ideas for the area not pan out before. "Honestly, there might be other sites that have a better chance of seeing the light of day (as a UM innovation center)," Grunow said. "I'm worried that it’s the latest big, bright shiny thing that is available to bedazzle us and ultimately bamboozle us into forgetting all the promises they’ve made." Grunow said he's wary specifically of the partnership aspect of the

Albert Berriz talks workforce housing, Ann Arbor and Cuba

Reprinted with permission from Crain’s Detroit Business. © 2019 Crain Communications Inc. All Rights reserved. | BY KIRK PINHO Further duplication without permission is prohibited. Visit www.crainsdetroit.com. #CD936

MCKINLEY INC.: Ann Arbor-based real estate company McKinley Inc. saw the writing on the wall for its retail portfolio a few years ago and cut bait, turning its focus primarily to its large crop of tens of thousands of workforce housing units across the country. One of the people at the helm of that decision was Albert Berriz, CEO and managing member, who came to America as a young boy fleeing Cuba and now steers a large company with a portfolio valued at more than $4 billion. Crain’s Detroit Business: Can you talk a little bit about how the McKinley portfolio began and where it’s at today? Berriz: McKinley started in 1968 in Ann Arbor, and it was founded by (former U.S.) Ambassador Ron Weiser. It started in the student housing business and eventually transitioned into more traditional multifamily housing, and in addition to that, office and retail, as well. Today, we’re primarily a workforce housing multifamily operator. We have essentially disposed of our retail and office assets in an effort to really focus on multifamily and also focus on an asset class that I think is more in line with our current goal, which is to have a generational multifamily real estate enterprise and a pool of assets that really are long term in nature.  Explain workforce housing versus affordable housing. We’re not in luxury housing. Our residents are working. They’re going to wake up tomorrow morning and go to work. Our average rents are, for example, in Washtenaw County, about $1,100 to $1,200 or in Orange County, or Seminole County, Florida, $1,400 or $1,500. So these are affordable rents. And the difference between us and affordable housing is our buildings are not subsidized. They’re all market rate, and they’re all privately owned. The owners are not receiving any form of subsidy, nor are the residents. However, if you wanted to sort of assess residents and low-income housing tax credit deals compared to ours, they’re probably not too dissimilar, the median incomes. The McKinley residents in, let’s say, Washtenaw County, when you look at the numbers are probably not going to be too much different than what you would see in a traditional LIHTC deal. But again, our buildings, the primary differences, our buildings are market rate and they’re not subsidized any way.

I don’t think it’s overblown to use the word “crisis” for Ann Arbor’s affordable housing situation. Give us your perspective on how the city should go about addressing it. I think it’s a supply issue. The reality is that Ann Arbor has not really welcomed solutions from the private sector and has only sought solutions from the public housing side or the community nonprofit side. And both of those groups, while I think they’re very well intentioned, don’t have the capital and the expertise to resolve the problem at the scale it’s needed. To put it in perspective, you know, the Washtenaw County study that came out had a need of about 3,000 units. And if you look at the cost per unit today, and let’s say $250,000 or $300,000 per unit to build a brand new unit today, you know, it’s an $800 million to a $1 billion problem, so I don’t think that’s a problem that gets resolved on the public side or on the community nonprofit side. You know, they have to go to places to seek capital and there just isn’t enough capital, nor do they have enough resources or expertise to resolve the problems. So the city I think, by and large, has attempted to do this in those ways because they really haven’t welcomed the private side. And there is a lot of expertise and there’s a lot of capital that could do this, from the private side perspective. It just hasn’t been the way that Ann Arbor operates, so you see what has happened in Ann Arbor year over year, decade over decade is there’s a lot of conversations about affordable housing, but there’s no solutions. You were talking a little bit earlier about how McKinley got out of retail and office. What led to that decision and how has that reflected or shaped your business strategy? It was a risk profile that we were just not comfortable with. We are a generational business and so we look at our assets in

a way that we never expect to sell them. We expect to invest in them so they last for long term, and we just couldn’t see that on retail. We saw a significant degradation of our rent rolls. We had buildings that were, let’s say, 70 percent to 80 percent investment-grade credit tenant composition and then we saw that we saw that quickly degrade. We just didn’t see a place where we could really have an asset class retail that would last for the long run. And then office in many ways, the same way. The way people are shopping and the way people are occupying offices today, the risk profile is very different than it was, let’s say, when we were making those investments 20 and 30 years ago, so for us, it was the right move. It’s paid off because, had we held many of the assets today, they would be significantly compromised. I think they would be worth a lot less. We started those sales about six years ago, and we sold a lot of that early on, so we sold them still at a time they were being valued significantly more than they would be worth today, in our opinion. And we sold some big buildings. I mean, these weren’t small buildings. We sold a 1 millionsquare-foot shopping center, for example, in Norfolk, Va., which is one of the largest power centers in the state of Virginia. So these weren’t small assets. So they were important for us to move them out at the right time, and for people that thought that was there was a good upside for them, so we actually sold them at good prices, and certainly we couldn’t have sold them at those prices today.

trajectory was to where you are today in terms of the head of McKinley. I left (Cuba) compliments of Fidel Castro in early 1959 because of the Cuban Revolution. We had to flee. It was survival to leave the country at the time and my parents relocated to Miami. We were fortunate for that. We’re fortunate to have left alive, fortunate to have resettled in what is without question the greatest country on the planet. I was not born here. I was born in Havana and I emigrated as a Cuban refugee just before I was 4 years old with my parents. What consumes your day outside of the office? My wife and I walk. We like to boat, so those are the two things. In our summers we live at Saugatuck, and it’s a great place to live. We’d live there year-round, but it’s a little too cold in the winter.

Can you give thumbnail sketch of coming here and what your

Albert Berriz, CEO and managing member, McKinley Inc.

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JULY 19, 2021 | CRAIN’S DETROIT BUSINESS | 21 25 MAY 24,

BEAUMONT AND SPECTRUM: HOW WE GOT HERE

Born from a merger, Spectrum grows into major health care player BY MARK SANCHEZ | MIBIZ

The Hillman Commission

The seeds for what became West Michigan’s largest health care provider took root nearly three decades ago. In the early 1990s, Blodgett Memorial Medical Center and Butterworth Hospital were fierce rivals engaged in a proverbial medical arms race, each trying to outdo the other. By 1993, business leaders across the region had had enough. As Butterworth and Blodgett each sought to build up their own medical specialties and buy the latest technology, the intense rivalry created costly redundancies in care, said Lody Zwarensteyn, who for four decades ran the former Alliance for Health, a health planning agency in Grand Rapids. Rather than have the two organizations continue as rivals, business leaders began to demand more collaboration, Zwarensteyn said. The final straw came in the early 1990s when Blodgett, situated in a landlocked residential neighborhood in East Grand Rapids, planned a massive 100,000-square-foot expansion to the hospital. Neighbors in the affluent community loudly opposed the plan. Blodgett directors later settled on a plan to build an entirely new hospital elsewhere. The move would position Blodgett along I-96 in eastern Kent County with a new $187 million hospital that was far more accessible than the longtime East Grand Rapids campus. Meanwhile, Butterworth was planning $73.9 million in upgrades and renovations at its hospital campus on the edge of downtown Grand Rapids.

Blodgett’s plan for a new hospital led to the formation of the Kent County Area Health Care Facilities Study Commission, commonly known as the Hillman Commission, that was chaired by the late federal Judge Douglas Hillman. The Alliance for Health “was only too happy to oblige” when Kent County commissioners asked it to help set up an independent group to examine health care in Grand Rapids and “see what was really needed,” Zwarensteyn recently told MiBiz. “The Alliance constituency were sick and tired of Butterworth and Blodgett trying to bash each other’s brains out to be the first, the best, the brightest of anything that came down the pike,” he said. “So we assembled the Hillman Commission.” The 23-member Hillman Commission, composed of regional business leaders, spent months examining health care in Kent County and hospitals’ needs. The panel issued 72 recommendations in May 1994, finding that “capital investments by health care corporations have not been adequately controlled by market forces alone” and that “consolidation among hospitals in Kent County would have beneficial effects on the community.” Zwarensteyn said the report essentially found: “To hell with these two hospitals particularly trying to bash each other’s brains out. The best solution would be to get together.”

A merger with condit ions The report laid the foundation for the eventual merger between Butterworth and Blodgett. Prompted by the

report, hospital executives began talking, and the boards at each hospital had agreed to a merger by the end of May 1995. Executives asserted that merging Blodgett and Butterworth would avoid nearly $100 million in capital expenses and generate $68.5 million in operating efficiencies over five years. Federal trade regulators thought otherwise. In January 1996, the Federal Trade Commission sought a federal court order to prevent the merger from proceeding, arguing that combining the two largest hospitals in Grand Rapids would concentrate too much power in the merged health system that would control 65 percent to 70 percent of the market. U.S. District Court Judge David McKeague ultimately ruled against the federal agency. McKeague concluded in his October 1996 ruling that the merger would “result in significant efficiencies, in the form of capital expenditure avoidance and operating efficiencies, totaling in excess of $100 million,” which he called a “substantial amount, and represents savings that would … invariably be passed on to consumers.” The ruling included a consent decree in which Butterworth and Blodgett agreed to five community commitments that included freezing charges temporarily, assuring equal treatment of health plans, and not providing favorable pricing to affiliated insurer Priority Health. Some of the commitments continue today, including an annual review of the health system’s finances by a permanent advisory committee, plus the routine posting online of quarterly and annual financial statements.

The FTC appealed McKeague’s ruling to the U.S. Sixth Circuit Court of Appeals in Cincinnati, but backed down when a measure introduced in Congress threatened to defund the agency’s antitrust enforcement, according to Zwarensteyn. In a September 1997 news release, the FTC said commissioners voted 3-0 to end the challenge to the merger “after concluding that further litigation in the case is not in the public interest.” With the FTC case over, Blodgett and Butterworth came together soon afterward. A new nonprofit corporation resulting from the merger, Spectrum Health, was formally incorporated on Sept. 19, 1997. However, integrating the two rival hospitals and their individual medical staffs proved difficult. In a 2018 interview with MiBiz, former Spectrum Health President and CEO Rick Breon recalled that when he took over in September 2000, the first issue he had to address was culture. The two hospitals had been “warring factions” for decades in the Grand Rapids-area health care market. “You had these great legacy organizations, and so when you bring them together, what’s created? It was not one acquiring the other. It was a bringing together of like-sized, like-thinking organizations, so you had to create the culture,” said Breon, who retired in August 2018 after leading Spectrum Health for 18 years. “When I came in, there was still a lot of Blodgett versus Butterworth going on, but I think there was a willingness to try to figure out a way to merge the two together,” Breon said at the time. “That’s what I saw, a willingness and anticipation. And if we did that, we

Spectrum at a glance HQ: Grand Rapids President and CEO: Tina Freese Decker Employees: More than 31,000 2020 operating revenue: $8.29 billion 2020 operating income: $412.2 million Hospitals: Butterworth Hospital (Grand Rapids), Helen DeVos Children’s Hospital (Grand Rapids), Blodgett Hospital (East Grand Rapids), Big Rapids Hospital, Gerber Memorial Hospital (Fremont), Kelsey Hospital (Lakeview), Ludington Hospital, Pennock Hospital (Hastings), Ludington Hospital, Reed City Hospital, United Hospital (Greenville), Zeeland Community Hospital, Lakeland Medical Center (St. Joseph), Lakeland Hospital (Niles and Watervliet)

might be able to have something pretty special here.” That “something” was ultimately a large, integrated health system providing tertiary care that was previously unavailable locally and that now spans a wide geographical market stretching from Big Rapids and Ludington well to the north of Grand Rapids to St. Joseph in the southwestern corner of the state.

The growth strategy Over two decades, Spectrum Health grew through a series of acquisitions involving community hospitals and primary care and specialty medical practices. That growth enabled Spec-

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Beaumont’s gurney ride to the top navigates some bumps BY DUSTIN WALSH

In May 2007, William Beaumont Hospitals — which at the time operated community hospitals in Royal Oak and Troy — acquired Bon Secours Hospital in Grosse Pointe. The move was the first large acquisition by the health system, one devised to expand its scope to eastern Macomb County and into Detroit to attract new patients and revenue. From there, the push to grow has never ceased. Spurred by a Great Recession that crippled debt markets and uncertainty around the 2010 implementation of the Affordable Care Act, Beaumont began merger talks with almost anyone that would listen. Insulating against any unforeseen financial strain became an industry norm, and Beaumont leaders followed through on their promise to cut costs, increase the scope of their operations and become the largest health system in Michigan by net patient revenue — at a cost. Now, nearly two decades later, the Southfield-based health system has eight hospitals and nearly $3.5 billion in cash reserves and investments. But, clearly, it’s not enough. Beaumont plans to merge with the state’s rising star of the industry, Grand Rapids’ Spectrum Health, by the fall. It remains unclear who benefits from this deal, but it’s the culmination of myriad factors making health care in America, and Michigan, too big to fail. 26 | CRAIN’S DETROIT BUSINESS | JULY 19, 2021

An aerial photo of Beaumont Hospital in Royal Oak in 1955. | BEAUMONT HEALTH

A dose of distress Less than a year after Beaumont acquired Bon Secours Grosse Pointe, the Great Recession hit. The housing crisis and tanking stock market led to soaring unemployment, resulting in loss of employer-based health insurance for millions of Americans. Hundreds of thousands of Michiganians lost gold-plated health benefits provided by the auto sector. The number of residents under 65 using public insurance options like Medicaid jumped to 22 percent by 2008, doubling since the

late 1990s. Beaumont initiated a $60 million turnaround plan, which included $46 million cut from expenses, $36.8 million of which was in staff reductions, out of a $2 billion budget in 2009. “Hospitals are no longer recession-proof,” Ken Matzick, CEO of William Beaumont Hospitals at the time, told Crain’s in late 2008. But more crucially to the health care sector, the debt markets dried up as banks and other lenders clamped back on lending. Ahead of and during the recession, William Beaumont Hospi-

tals was outgrowing its footprint with patients. “Beaumont was contemplating significant expansions, particularly of its emergency room at Royal Oak as it was one of the few trauma centers in Michigan,” said a longtime former board member at Beaumont who asked to speak on the condition of anonymity. “We needed to expand the ER and modernize it. It was over capacity with patients. Then the credit market shut down. Beaumont had to face raising significant capital at a really high interest rate. That fear was all over the in-

dustry.” That created an imperative to get bigger so you will have more financial strength to get though a recession or difficult times and be able to raise money at a more favorable interest rate. “There was just too much turmoil in the whole health care industry,” the former board member said. Ash Shehata, principal and U.S. leader for the health care and life sciences practice at advisory firm KPMG, said regionalization became the name of the game in health care, specifically for health systems to own physician networks and outpatient services. The easiest way to do that was to also acquire hospitals. “There was a great leveling of outpatient and inpatient services,” Shehata said. “These health systems needed profit centers like outpatient centers and same-day surgery centers. That spawned a new wave of acquisition strategy and an undercurrent that bigger was better. More access in the community meant more access to money.” The pressure mounted thanks to landmark legislation. On March 23, 2010, President Barack Obama signed into law the Affordable Care Act, creating even more heartburn for worried hospital administrators. The former Beaumont board member said consultants were saying Obamacare would pose a financial hit to Beaumont of $700 million or more as hospitals were expected to see an

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A historical photo of Butterworth Hospital. The system has roots that go back to the 19th century. | GRAND RAPIDS HISTORY & SPECIAL COLLECTIONS DEPARTMENT, GRAND RAPIDS PUBLIC LIBRARY

trum to launch specialized medical services that previously were unavailable in the market. The acquisitions included a large cardiology practice in Grand Rapids, West Michigan Heart, and the region’s largest group medical practice, Michigan Medical P.C., in 2009. Both were integrated into Spectrum Health Medical Group, which the company had formed a year earlier. The first community hospital acquisition came via United Memorial Health System in Greenville in 2003. Gerber Memorial Hospital in Fremont followed in 2010. As the health care industry continued to consolidate, community hospitals in Ludington, Zeeland, Big Rapids and Hastings and

St. Joseph all became part of Spectrum Health. Spectrum Health declined other deals and potential suitors over the years, including “more than one” unnamed Detroit-area health system that inquired about a merger, Breon said in 2018. “We have turned down several opportunities with other organizations — to either acquire, merge or any of that — because we feel strongly we wanted to be West Michigan-based,” Breon said. Tina Freese Decker, who’s been with Spectrum Health since 2002 and previously served as executive vice president and chief operating officer, succeeded Breon as CEO after his re-

tirement. Other potential mergers have failed to move forward. Traverse City-based Munson Healthcare ended merger talks with Spectrum Health in 2010 to pursue other options. Spectrum Health also was in talks with Mary Free Bed Rehabilitation Hospital in 2010, but those discussions ended later that year without a deal. However, the two organizations signed an agreement in 2018 to form a “deeper relationship” and work together on research and coordinating patient care. Over the past two decades, Spectrum Health has also invested heavily to develop new facilities and medical

specialties, including initiating heart, lung and bone marrow transplants. Spectrum Health performed its first heart transplant in 2010. The idea behind launching each service was that patients in West Michigan who needed a transplant would no longer have to travel outside of the region to destinations such as Chicago, Detroit or Ann Arbor. Meanwhile, Spectrum has expanded with hundreds of millions of dollars of investments in new facilities. The $80 million Fred and Lena Meijer Heart Center opened at the downtown Butterworth Hospital campus in 2004. Four years later, Spectrum opened the Lemmen-Holton Cancer Pavilion, a $78

influx of Medicaid patients. That didn’t really happen, but administrators doubled down on the need to grow. “Health care has been changing rapidly for quite some time and the changes have accelerated in recent years,” John Fox, Beaumont Health’s current president and CEO, told Crain’s in an emailed statement. “Forward-thinking health systems, like Beaumont Health, must consider how this changing environment affects our patients, team members, community and ability to provide care in the future. Health care reform, new models of care, shifting patient expectations and financial realities are all part of the headwinds facing health systems.” Fox joined Beaumont in 2015. He previously served as the president and CEO of Atlanta’s Emory Healthcare Inc., the largest health care system in Georgia. Beaumont was also being hit by scandal at the start of the last decade. A series of whistleblower lawsuits emerged, starting in 2010, over allegations of high-profile physician kickbacks, including pay in excess of $700,000 annually by the system, use of hospital employees for their office practice without charge but still allowed to bill insurers, the government and patients themselves. Beaumont settled the suits in 2018 for $84.5 million.

a partner in Detroit’s Henry Ford Health System. The pair planned to merge to create a $6.4 billion, 40,000 employees system with 10 hospitals and 200 outpatient centers. Most importantly, it would control 40 percent of the Southeast Michigan health care market. Fox Beaumont would gain access to Henry Ford’s owned Health Alliance Plan insurer, a lucrative means to control costs and allow Beaumont access to several benefits contracts with automotive workers. But that deal fell apart only six months later. Leaders couldn’t agree where to locate the headquarters — Detroit where Henry Ford sits or Royal Oak with Beaumont. Talks also broke down over business operations, as Beaumont wanted Henry Ford to open HAP members to Beaumont’s suburban hospitals and Henry Ford said no, as Crain’s reported. Beaumont also wanted Henry Ford to shrink the footprint of its flagship Detroit hospital to control costs, and likely force more patients to Grosse Pointe and Royal Oak. Beaumont leadership went back to the drawing board and found willing partners in Dearborn-based Oakwood Healthcare Inc. and Farmington Hills-based Botsford Hospital. The group closed on a $3.8 billion deal in 2014 to merge in a bid that created Beaumont Health, which took control of 30 percent of the local inpatient

market. Executives of the new system, which was renamed Beaumont Health, claimed it would see $134 million in cost savings from operating a single electronic health record system, consolidating back office business functions, billing and collections and purchasing. It’s unclear whether the system was ever able to achieve those savings. Beaumont’s safety record did decline at its Royal Oak hospital after the merger, according to the Leapfrog Hospital Safety Grade quarterly ratings. The hospital’s safety grade dropped to a C in the spring of 2021 from a B at the time of the merger in 2014. Beaumont did improve the safety grades at the Dearborn and Grosse Pointe hospitals. Fox was hired to lead the new health system in 2015. His goal was singular. Cut costs and expand the new organization’s scope. A merger was always top of mind, he said. “For Beaumont Health to continue to be the leading health system in Michigan, we must make bold decisions about our future,” Fox said. “For some time, Beaumont Health’s board of directors and leaders have been evaluating how we can best serve patients today and in the future. Our board looked at four options to determine the best path forward for our organization: remain the same, be acquired by a larger system, acquire

other smaller health systems, if available, or become an equal partner with another comparable health system.” Beaumont tried three of those four options in the past 18 months. Beaumont signed a letter of intent to acquire Akron, Ohio-based Summa Health in July 2019, only to cancel that deal in May 2020 as revenues collapsed during the COVID-19 pandemic. In June 2020, Beaumont announced another letter of intent to merge with Downers Grove, Ill.-based Advocate Aurora Health. That merger would have created a $16 billion, 36-hospital system with locations in Michigan, Illinois and Wisconsin. Beaumont officials touted that merger as a potential boon, as the letter of intent outlined a $1.12 billion investment in Beaumont over three years at $375 million annually, Crain’s reported. “Once these merger talks start, they never stop,” said the former board member. “It’s a small industry and everyone knows each other. Plus the cottage industry of consultants are dependent on deals getting done. One way for executives and consultants to make a lot of money is through a merger.”

Multitude of mergers By late 2012, Beaumont had found

Shedding weight, connecting coasts It didn’t take long for an outcry to start. A month after announcing the let-

million outpatient cancer center across the street. The new $286 million Helen DeVos Children’s Hospital followed on the Butterworth campus in 2011, built with $103 million in donations that included $50 million from the DeVos family. Spectrum Health also developed a number of integrated care outpatient campuses across the region that consolidated primary and specialty care doctors in local communities into a single location and added services such as diagnostic labs and medical imaging. As Spectrum Health grew over the last two decades, so did its health plan. Priority Health came together with the 1992 merger of Butterworth HMO and Holland-based Lakeshore HMO. It later added Traverse City-based NorthMed HMO in 1999, extending Priority Health into the northern Lower Peninsula. In 2007, Priority Health acquired the Care Choices HMO and PPO plans from Trinity Health to move into the Southeast Michigan market. In 2019, Priority Health further expanded its market presence in Southeast Michigan with the acquisition of Detroit-based HMO Total Health Care Inc. The second-largest health plan in Michigan behind Blue Cross Blue Shield, Priority Health has more than 1 million members enrolled in a variety of commercial, individual, Medicare and Medicaid plans. Today, Spectrum Health consists of 14 hospitals in Western Michigan, 150 ambulatory care sites, more than 31,000 employees and 4,700 physicians and advanced practice providers. Spectrum Health owns a 93.9 percent share of Priority Health. Munson Healthcare owns a 5.5 percent stake and Petoskey-based McLaren Northern Michigan owns 0.6 percent.

Beaumont at a glance HQ: Southfield President and CEO: John Fox Employees: 33,000 2020 operating revenue: $4.6 billion 2020 operating income: $176.6 million Hospitals: Dearborn, Farmington Hills, Grosse Pointe, Royal Oak, Taylor, Trenton, Troy, Wayne

ter of intent with Advocate Aurora, a “no confidence” petition began circulating among Beaumont’s physicians, calling for the system’s board to fire Fox and Chief Medical Officer David Wood Jr. “Over the last five years, we the medical staff of Beaumont Health have seen a rapid and progressive deterioration in every aspect of patient care at Beaumont Health. We no longer have confidence in the administration’s ability to provide a safe place for us to care for our patients,” the petition said. The petition also took aim at the Aurora merger, fearing it would remove local control from Michigan hospitals. Beaumont’s board quickly responded that the Michigan hospitals would remain under local control. But the damage had been done. In August, Beaumont and Aurora anSee next page JULY 19, 2021 | CRAIN’S DETROIT BUSINESS | 27

EVANS

From Page 3

County has amassed a $192 million surplus fund balance and the investment rating agency Moody’s Analytics just upgraded its bond rating to A3, the county’s highest bond rating in 11 years. Evans also got the jail project restarted in a deal with billionaire businessman Dan Gilbert that capped Wayne County’s cost at $380 million for a $533 million criminal justice complex under construction at East Warren Avenue and I-75. And now Wayne County is sitting on a $339 million pile of once-in-alifetime federal stimulus funds to help it recover economically from a oncein-a-lifetime pandemic that has claimed the lives of 4,877 county residents. The challenge Evans and the Wayne County Commission now face is how to spend the one-time federal infusion of cash without growing the size of county government, which operates with about $100 million less in general fund revenue today than it did in 2007 before the Great Recession took a bite out of taxable property values. “We’ve been studying, trying to figure out what long-term benefit can we create for the county with this money — something that goes past paying a bill,” Evans said.

‘Not totally fleshed out’ The sheer size of the stimulus check from Washington and restrictions on how it can be spent — Wayne County can’t use it to shore up its still-underfunded pensions — is proving to be as difficult as eliminating deficits were in the early days of the Evans administration. Evans said his team has been “think-tanking” how to use the stimulus funds. His top priorities are addressing systemic problems with access to health care in Detroit and lower-income suburbs and economic development projects that bring more jobs, residents and tax revenue to the county. The pandemic exposed an apprehensiveness that people of color have toward accessing the health care system, adding to the difficulty of getting them tested for COVID-19 and vaccinated, Evans said. Evans said he’d like to use an unspecified amount of the federal stimulus expanding access to primary care in Detroit, Inkster, River Rouge and other communities with high concen-

Credit rating rebound Moody’s Investors Service on July 8 gave Wayne County its highest credit rating in 11 years, upgrading the county’s debt to the investment grade rating of A3. Wayne County’s bond debt had been rated junk bonds for the past decade by Moody’s and other Wall Street bond-rating agencies. Date

Rating

Outlook

7/8/21

Positive

9/18/19

Baa1

Stable

6/15/18

Baa2

Positive

5/24/17

Ba1

Positive

1/31/17

Ba1

Stable

9/26/16

Ba2

Positive

2/6/15

Ba3

Negative

8/1/13

Baa3

Negative

7/13/12

Baa2

Negative

12/16/11

Baa2

Stable

12/8/10

Negative

SOURCES: MOODY’S INVESTORS SERVICE; WAYNE COUNTY

trations of poverty. He notes studies show people are more likely to see a doctor within three miles of their home, and in many parts of Wayne County, there’s not a primary care physician within that radius. Evans envisions a role the Wayne County health department could play in integrating medical records between private providers. “We certainly can adapt how we provide services in a way that’s more conducive to creating a comfort level for people of color and people with not enough primary care physicians,” Evans said. “A lot of this is just dollar driven.” Over the past year, some Wayne County residents have had difficulty getting tested for COVID-19 or getting a vaccination shot because of an already limited primary care system in their communities that was stretched thin during the periods of COVID-19 case count surges. “I’d like the county to be in a better position to be that primary care hub where we have those records for people,” Evans said. “... The older you get, the more that information would be helpful for diagnosis and other purposes.” The county executive acknowledged the ideas on using stimulus funds to expand access to health care in certain communities is “not totally fleshed out.” His administration is waiting until

M&A

From Page 3

Far from it in fact, according to Michael Bell, co-leader of the financial institutions practice group at the Detroit-based Honigman LLP law firm, who focuses primarily on bank M&A. Smaller banks still need scale to compete, and larger banks feel the need to continue growing, he said. “There’s multiple reasons why the market moves and this (executive order) doesn’t stop any of those reasons, or change them,” Bell said. “I think there’s merit in these changes (within the order), perhaps. But it doesn’t change the reasons that these (M&A) deals occur, and they’re going to keep occurring.” The executive order “affirms that it is the policy of (the Biden) Administration to enforce the antitrust laws to combat the excessive concentration of industry, the abuses of market 28 | CRAIN’S DETROIT BUSINESS | JULY 19, 2021

Dickow

Conti

power, and the harmful effects of monopoly and monopsony — especially as these issues arise in labor markets, agricultural markets, Internet platform industries, healthcare markets (including insurance, hospital, and prescription drug markets), repair markets, and United States markets directly affected by foreign cartel activity.” Banks have turned to mergers to contend with the financial impacts of ultra-low interest rates and the need for heightened technology spending. The M&A surge was just restarting in

the fall to detail spending proposals for the stimulus funds and see how much Wayne County may get from a new federal transportation infrastructure spending bill before making commitments to road, bridge and underground infrastructure projects. But in weighing how to spend the federal funds, Evans said the county has to balance wants with “what we need.” “At the end of the day ... we want more people to live in Wayne County, we want more people to buy houses in Wayne County, we want more people to pay property taxes in Wayne County and we want to create more jobs in Wayne County,” Evans said. One area where Evans thinks there could be better coordination of health care services is if Wayne County and the city of Detroit merged their public health departments. Earlier this year, the two health departments in one county would often be competing for weekly doses of COVID-19 vaccination doses from the state. In late February, when Detroit was getting more weekly doses of vaccine than Wayne County despite accounting for one-third of the county’s 1.8 million residents, the Detroit Health Department opened up its drive-thru vaccinations at TCF Center to suburban residents who brought an older Detroiter in the same vehicle. Wayne County, in turn, sent vaccine doses to certain suburbs such as Livonia and Dearborn that were restricted to just residents of those communities, despite the proximity to Detroit and crossover in economies. But Evans is loath to have that “political fight” with the Wayne County Commission, the Detroit City Council and Mayor Mike Duggan and likely the Legislature and governor. “Our turf wars are as much as anybody else’s,” Evans said. “There’s really no question that one health department for the county really makes more sense than having two departments, especially when that originally occurred, Detroit was Wayne County. Now Detroit’s about onethird of it.” But “the common sense” approach to merging the two departments may not be politically feasible, Evans said. “Have we spent any time trying to retool and redesign that? We haven’t,” Evans said. “Because I think the political fight is probably not worth the squeeze.” Contact: clivengood@crain.com; (313) 446-1654; @ChadLivengood the U.S. after largely being on pause during the height of the pandemic. U.S. banks have announced $47 billion worth of deals this year alone, more than the $45 billion announced in all of 2020, Bloomberg reported. That includes New York Community Bancorp Inc.’s planned purchase of Flagstar Bancorp Inc. for $2.54 billion. To what extent the order does put a damper on M&A activity, experts say it’s likely to be uneven. One financial source told Crain’s that they foresee stalled M&A activity at the higher end of the spectrum, known as the “bulge bracket,” which would then move downstream. “I think it will have a chilling effect,” said Alex Conti, the managing director for corporate finance in the Farmington Hills office of tax consulting firm UHY LLP. “The bulge bracket kind of sets the stage for the middle market and below,” Conti said. “If large corporates

BEAUMONT

From Page 27

nounced merger talks had been delayed and those talks ultimately ended in October. The explosion of physician unrest at Beaumont is the culmination of years of cost-cutting amid merger talks. Fox has spent much of his time looking to boost Beaumont’s profit margins, largely as a means to be valuable to potential partners but also to build Beaumont’s investment portfolio in preparation for unforeseen financial strains the industry may face in the future and to reinvest in technology. “Yes, we strive for a 4 percent margin so that we have the resources to continue advancing care for our patients,” Fox told Crain’s in an email. “A 4 percent margin is adequate, but not excessive for internally generating some of the capital needed to replace worn-out equipment, obtain new medical technology, etc. Our margin has given us the opportunity to reach more patients through new outpatient campuses in Macomb and Wayne counties, opening 28 urgent care facilities to provide more convenient access to patients and to better address the mental health crisis by opening a new behavioral health hospital (in Dearborn) and residency program later this year.” At the end of the first quarter of 2021, Beaumont Health had $3.06 billion in cash on hand — or twice as much as Southfield-based Lear Corp., the fourth-largest public company in Southeast Michigan. The board member said more hospital boards have put importance on the cash on hand as it’s more stable and predictable than policy and health care operations. “Beaumont, like many large hospital systems, is in two separate businesses — providing heath care and managing the money,” the board member said. “Systems can earn significant amounts of money on their investments. on that. That’s a huge portion of the income for Beaumont.” Despite the cash, investments and cost-cutting measures, Beaumont Royal Oak remains one of the lowest-reimbursed health systems in the region. Health plans paid only 143 percent above Medicare for inpatient and outpatient services at Beaumont Royal Oak, according to the are sort of deterred from growing through M&A, the private equity at that upper end is going to take note. They’re not going to invest unless they have an exit strategy.” Conti noted that he’s skeptical that the all-stock $26 billion merger of wireless giants T-Mobile and Sprint, completed in 2020, would have passed through the Biden administration given current rhetoric. On a more local level, he said that the proposed merger between Grand Rapids-based Spectrum Health and Beaumont Health in Southfield makes for a “great example” of the type of deal that’s likely to draw scrutiny. The potential benefits of the deal, proposed last month, remain unclear, as Crain’s has previously reported. The health systems’ proposed merger makes for “an example where a provider is trying to get stronger to drive up rates on payers,” Conti said. The challenge, he noted, is that

Hospital Price Transparency Study released by RAND Corp. That’s only more expensive than Henry Ford Macomb Hospital and Henry Ford Wyandotte Hospital in the region. The board member said Beaumont has never been able to successfully raise its reimbursement from large insurers like Blue Cross Blue Shield Michigan to align with its competitors because the Royal Oak hospital started as a community hospital instead of an academic one like Michigan Medicine or a “community-critical” hospital like the Detroit Medical Center. “Beaumont Royal Oak always got a lot of patients and attracted good doctors because it was in a good location, but it wasn’t a primarily an academic and teaching hospital,” the former board member said. “These things get built into the system. DMC was always paid more too because it was deemed a safety-net hospital. The point is and other private insurers pay different amounts per procedure for different hospital systems. It makes no sense, but Beaumont has suffered because of it and that’s part of why you’ve seen this pledge to get bigger.” Fox acknowledged the lower reimbursements and said the merger with Spectrum, and access to its inhouse insurer Priority Health will offer Beaumont leverage. Presumably, the merged companies will have greater negotiating power with Blue Cross, the region’s largest health insurer, especially with the threat of a competitive Priority. Shehata said that’s what all these mergers are really about — leverage. “Hospitals are becoming multiprong enterprises,” Shehata said. “The systems that have grown to some scale in size have more power. They can take on more longterm agreements with the health plans and physician networks. They can better control the market. Those with larger cash reserves and infrastructure have been able to rebound more rapidly during crises. But who wins is the question left unanswered. The consumer can be the winner if these entities bring out new advancements in technology, making patient care more available to the broader community. But right now the power sits with the consolidators, and it’s not clear it will help.” Contact: dwalsh@crain.com; (313) 446-6042; @dustinpwalsh “anti-competitive” is something that is difficult for regulators to measure. “At the end of the day with the FTC, you’re in sort of subjective territory to say that something is anti-competitive,” Conti said. “There’s not like a measuring stick that you use.” The hesitancy on the part of larger, corporate players mentioned by Conti could actually lead to opportunity for middle-market companies, said Andrew Dickow, managing director at Greenwich Capital Group, a Birmingham investment bank. “I actually think it’s going to be a boon for them just because some of these larger companies are going to have to get more tactical on making smaller bets on innovations, because there’s so much scrutiny on the horizontal and vertical merger guidelines now,” Dickow told Crain’s. Contact: nmanes@crain.com; (313) 446-1626; @nickrmanes

LUBER

 What was it about the StockX playbook that allowed it to stand out? It’s about the model. Everything takes an amazing amount of timing and luck on top of all of that. It’s about having that unique mousetrap. It’s just about making it easy for people to be able to buy or sell products that are otherwise hard to buy and hard to find. And the reason the products have been hard to get and hard to deal with is often because they have been treated like consumer packaged goods. We didn’t make any of this up. We learned from how the stock market works. That was a key, and that’s why there is still so much untapped potential. As you know, Scott spent the last two years now trying to get the nuts and bolts in place to get the right framework very fast.

From Page 3

To me, it was the office, it was the experience, it was what does it look like to work at StockX. I spent a massive amount of time designing the office and working on the redesign and everything around it. Dan gave us the playbook and gave us the permission to be ourselves. There was a time in early 2017 when I was in Tokyo and Dan was hosting a show on CNBC. He was having me as a guest. I called him ahead of time and was like “do y’all not want me to wear a hat for this?” Dan made some sort of a joke to emphasize that we don’t have to change who we are. What might be the most surprising aspects about the launch and growth of the business that hasn’t yet been reported? I think that what is missed the most is that it’s about the model. I’ve had the privilege of speaking all around the world, and I can’t tell you the number of times that the first question from the interviewer is like “What’s your favorite pair of sneakers, like what was the most expensive pair of shoes sold on StockX?”We happened to sell shoes but we sold a lot of other products, too. It’s about this unique model, which has been referred to as “the stock market of things”. It’s about a completely new way of pricing products, about products that sit in this intersection between commerce and finance where these demand-driven products should not be priced using (consumer packaged good) models. Very few people discuss it, and fewer yet understand it. It’s way better clickbait to say, you know, “StockX sells $30,000 Air Jordans” than talking about the financing models.

“IT’S ABOUT THE MODEL. EVERYTHING TAKES AN AMAZING AMOUNT OF TIMING AND LUCK ON TOP OF ALL OF THAT. IT’S ABOUT HAVING THAT UNIQUE MOUSETRAP. IT’S JUST ABOUT MAKING IT EASY FOR PEOPLE TO BE ABLE TO BUY OR SELL PRODUCTS THAT ARE OTHERWISE HARD TO BUY AND HARD TO FIND.” — Josh Luber, founder StockX

 How did being in Detroit impact and define the company that you created in your journey as an entrepreneur? You can’t separate the experience of being in Detroit from the experience of working with Dan. Having a company that was so close to him and having his personal goal in life as the advancement of Detroit. He’s done extraordinary things and some stuff that (I’d view) as superhuman. It takes an absolutely, unbelievably focused effort to do what Dan has done. We’ve benefited a lot from just seeing that, and seeing how somebody executes with an extraordinary vision. We also saw the benefit of being sort of a big fish in a smaller pond. In the beginning, we were able to leverage many of those resources. Since it’s a smaller ecosystem (in Detroit), a lot of people looked out for each other and we were able to lean on a lot of that in the beginning. Becoming a tech company in Detroit was a part of that narrative. We

were united in our focus on the growth of Detroit as a mission. We required senior leaders to live in the Detroit area, which made it harder to hire CFOs and similar roles — but we wanted to be committed to the higher purpose of rebuilding Detroit, which included the little things of having team-building activities in the city and not in the suburbs.  What perspective would you share with an economic development leader about the future of work? The new company that I’m working for has 10 people and we live in seven different cities. Everything is remote. We don’t have an office where we can all be together. And I don’t know if we ever will. It’s also worth noting that because of COVID and the dispersion, StockX now has senior leaders that live in cities across the country. As the company comes back, the center of gravity may not be what we originally had. The amount of exposure that we had when everyone came through to visit Dan helped the business a lot. We were right there (a few feet away) when people came to visit Dan and we were able to benefit from those relationships. Our first big-name investor was Eminem and that was 100 percent a function of Paul Rosenberg (Eminem’s manager) coming through the office and discussing music stuff in Detroit (with Dan). It was my idea to bring on Scott. We were not looking for a CEO, but Scott was our investor and had been a mentor to us. Gregg (Schwartz, another StockX founder) and I met with Dan about the idea. Two weeks after Dan came around to the idea, he suffered the stroke. If that happened in reverse, I am not sure what we would have done.

 What’s one insight that stands out as you reflect on your time here? It’s not very hard to network through the ecosystem and meet the right people. I grew up in Philadelphia, and I lived in New York for a couple years until a couple years before I moved here and I remember genuinely being shocked by how nice everyone was in the Midwest. It is obviously somewhat of a cliche but the welcoming part is certainly way different than in the Northeast or anywhere else.  How did the transition from CEO come about? I didn’t have a very specific reason why, but I knew I didn’t want to be a public company CEO. I was catching up with an early employee the other day and he mentioned that it’s like he worked at three companies, referring to StockX in its early startup phase, in its hyper growth phase and now with things more structured, which was a good perspective in thinking through how different phases of a company have different roles and needs.  Where to next? I grew up in Philly. I lived in Atlanta for 15 years. I’ve always kind of gone where life takes me. Right now, it’s Austin (where Josh has several family connections and will be working on ventures and a fund in the trading card space).  Any closing thoughts? I’ll be really interested to see how things evolve here (post-COVID).... Dan was extraordinary for me and for StockX … and I would start a company with Gregg (Schwartz, another StockX co-founder) again tomorrow. We were perfectly complementary in every way.

HOW TO BUILD SUPPLIER DIVERSITY

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